L. Rebibo (Trakx): “We are seeing growing action in the cryptocurrency market”

Decision makers. What trends are you seeing in the cryptocurrency market?

Caroline Jacquard. This nearly $2 trillion asset class can no longer be ignored. It is gaining momentum and is shared between Millennials who buy bitcoins, coins or tokens directly, and institutions who are really interested in it.

Lionel Rebibo. This growing interest in cryptocurrencies is measured by different matrices: the creation of cryptocurrencies, the number of accounts on centralized trading platforms, trading volumes… All this demonstrates the growth of the market which is maturing. Moreover, investors understand and distinguish more between the different products available. While the retail part historically represented the majority of the sector (85%), we are now seeing increased institutionalization, with the arrival in this segment of family offices and hedge funds.

What are the current opportunities?

CJ At the macroeconomic level, given the current context of inflation and general loss of asset value, investors have everything to gain by diversifying their portfolio with cryptocurrencies.

“Investors have everything to gain from diversifying their portfolio with cryptos”

LR Those looking to hedge against the risk of inflation or macroeconomic events can turn to bitcoin, which remains an instrument of choice and an obvious opportunity. Ethereum is the team maker of issued crypto-assets and represents the broader opportunity to embrace the growing adoption of blockchain. Alternative coins are also very interesting: the market discovers tokens issued by protocols that solve various problems. Finally, there is a real opportunity on the subject of decentralized finance.

Volatility and the lack of regulation are two major obstacles observed in this market. Do you agree?

CJ For some investors, volatility can be seen as a brake while for others it will be, on the contrary, an opportunity. The markets are currently volatile on all asset classes and it is interesting to allocate part of your portfolio to cryptocurrencies. This volatility can be put into perspective in the short or medium term. Regarding the regulatory aspect, this subject is at the heart of the news and represents a major barrier to entry for many investors. Trakx has opted for AMF-ACPR regulation on four licenses that allow it to operate as an exchange platform, provide asset custody services and exchange digital assets with each other and for legal tender currency . The registration process with the financial authorities is long but should be adopted by more and more companies. Moreover, in the current context of war in Ukraine where cryptocurrencies could be used by some to circumvent economic sanctions, governments will increase their attention to regulation.

“Institutionalization reduces volatility”

LR These major brakes are now dissipating. The introduction of derivatives – options and futures – makes it possible to put in place restoring forces and compress this volatility. Moreover, there is growing action by institutional investors who have a greater investment capacity than individual investors. Investing in the long term, they create more stability in flows. Institutionalization therefore makes it possible to reduce volatility. Conversely, some fear the day when it will become weak because this instability constitutes an opportunity. Regarding regulation, all regulators are making progress on the subject, particularly in Europe with the draft Markets in Crypto-Assets (MiCA) regulation, which will come into force next year to define a clear framework for this asset class. In the United States, Joe Biden remained vague on the subject, but it appears that the Americans will move forward on the subject to reassure investors.

Are there any other obstacles currently?

C.J. Lack of knowledge is a major barrier to entry, we must move forward on investor awareness of cryptos.

LR In my opinion, the infrastructure is the biggest obstacle but many professionals are working on the subject. The infrastructure is the custodial part that technically poses a problem for almost all the biggest investors.

Cryptocurrencies: a safe haven in the same way as gold?

LR No, we cannot speak of a safe haven for all cryptocurrencies because cryptocurrencies represent only a small part of all crypto-assets. Bitcoin represents just over 50% of the capitalization of all digital assets. It is considered a safe haven for investors during macroeconomic or geopolitical events.

What investment horizon should you aim for when investing in cryptocurrencies?

LR It depends on the type of crypto-asset. Bitcoin, when integrated into the portfolio’s long-term allocation (like real estate or gold), is a good element of diversification. Ethereum is more suitable for a medium/long term strategy to play on the blockchain. The other tokens issued have different profiles and are generally traded over a shorter term.

Interview by Juliette Woods

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L. Rebibo (Trakx): “We are seeing growing action in the cryptocurrency market”

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