The cryptocurrency market has always been a volatile one. In 2021, crypto prices surged to all-time highs, making billionaires out of investors.
The reverse happened in 2022 when prices of some of the biggest coins fell by nearly 50% in the first half of 2022.
In November alone, the prospects of crypto looked worse with the collapse of FTX.com. FTX.com filed for bankruptcy on Nov 11 after it experienced a surge of customer withdrawals from its platform.
Another crypto firm, BlockFi Inc., was FTX’s latest casualty as it filed for bankruptcy on Nov 28.
The turmoil in the markets comes after Bitstamp’s survey in August that revealed that of the five markets in the Asia Pacific (APAC) – Singapore, Australia, Japan, India and Hong Kong – Singapore saw the biggest drop in trust for crypto among institutional investors.
The lack of regulation in the crypto market was also found to be the top barrier cited by institutional investors for not investing in the market.
To Bitstamp CEO Jean-Baptiste (JB) Graftieaux, the crypto market has to have “robust regulations” designed around consumer protection and business practices.
“There must be safeguards put in place to discourage companies from risky behaviour, to ensure that they take precautions against attempts to use their services for money-laundering and other illicit activities, and to help them understand the importance of always placing the customer first,” he says.
“Companies and institutions in the space must also make the education of customers a priority. When people are well-informed, they make smarter decisions,” he adds, noting that educating investors about crypto is a must, and not something that’s just “nice to have”.
Conducting due diligence
Research before investing in any market or asset is a must, and even more so for more volatile assets such as crypto. But while this rule applies to investors, Graftieaux says crypto exchanges must also do their due diligence on their part.
“Before listing a certain token, exchanges must assess a token for things like the team behind it, its utility and practical applications, issuance policy, and more,” he says.
Never invest more than you can afford to lose
With the prices of cryptocurrencies taking a beating, some investors may be tempted to take advantage of the lower prices. To Graftieaux, nothing is for certain.
The one rule he insists upon, however, is to “never invest money you cannot afford to lose”.
When asked about his view on the ongoing crypto winter, Bitstamp’s CEO notes that “as with every kind of investment, past performance is no guarantee of future results”. That said, he adds that investors should look at their portfolio for the longer term and think of how crypto will feature in their portfolio in the long run.
On this, investors who still believe in the prospects of the crypto market should look to a “regulated and secure” platform.
“[Your platform of choice] should hold your assets in a secure manner and offers great customer support,” says Graftieaux.