In its Q3 report, Saxo Bank expressed that digital assets are currently in limbo, pending extensive macroeconomic results.
Saxo Bank, a Danish investment bank that focuses on online trading and investment, said that the current status of the crypto market puts the sector in an uncertain position amid heightened price corrections.
In its third-quarter outlook report for digital assets revealed today, the bank expressed that the next market price decision will rely on features such as the general economic outlook and potential competition from the central bank’s ongoing digital currency research.
Saxo Bank also said that digital assets are currently in limbo, expecting improvements in regulation and institutional adoption, not to mention the ongoing investigation into central bank digital currencies as a potential competitor.
A Declining Market
On the other hand, Saxo said that the defenders believe that the current bear market is an opportunity for the industry to recover, considering that it presents space to keep investing in the market.
In this regard, he noted that the bears observe 2022 as the beginning of a possible crypto winter; where lower crypto prices and reduced participation in crypto apps would decay in parallel with a negative feedback loop.
On the other hand, optimists wait for a convenient spiral if crypto investment increases, driving up the price and enthusiasm for taking more part in crypto technologies. Users observe the declining market as a slight chance to get ready for the next bull run and as a healthy cleanup of the crypto space.
Not Like Gold
The bank’s report also expressed that, although the supply of Bitcoin remains limited, as is physical gold, and crypto gets compared to gold, the correlation between Bitcoin and physical gold was significant throughout 2020 and early 2021. However, market events in 2022 have eroded this narrative, and the correlation between the two is now low.
The entity adds that concerns about digital assets as a store of value grew further in May when a stablecoin turned out to be unstable. The decoupling of TerraUSD, a token supposedly attached to the value of USD$1, raised concerns about the stability of the digital assets.
Strict Crypto Regulations
Saxo notes that the fall will potentially unleash stronger regulations, as it has raised questions about the stability of digital assets. This event happens while different jurisdictions lead an ongoing discussion about the correct crypto regulatory framework.
According to the bank, the widespread Crashdown of digital assets in 2022 needs all sectors to work in balance as it has raised questions about whether the industry can resist the pressure.
By: Jenson Nuñez
