At WEF in Davos Signs of Crypto Optimism

More signs emerge that 2023 holds good portents for digital assets and crypto. Adoption is growing, the attention brought by the FTX collapse is driving out other such grifters, and crypto projects seem to be more stable, retail speculators are showing more interest, and – broadly speaking – asset prices are up.

That’s not to say there aren’t challenges.

For one thing, many of the structural difficulties for the crypto markets remain in place, according to ZK Zheng, CEO of ZX Squared, a crypto hedge fund.

“2023 continues to be challenging for investors especially during the first half of the year when the [Federal Reserve] is still hawkish, raising interest rates to control the inflation,” Zheng said. “The current crypto bear market cycle may end when the Fed stops raising interest rates (hopefully by the second half of the year), and any remaining leverage in the crypto market is eliminated. This includes debt borrowing related to certain major market participants (investment firms, distressed assets, mining companies, etc.).”

Several of the notable developments last year will help set the course for this year – not only the failures of FTX and Three Arrows Capital, but also the ongoing work to create a regulatory framework for digital assets in the financial industry undertaken by government agencies.

A lot of people expect regulation to become a primary issue in 2023. In fact that was a big topic at the World Economic Forum in Davos last week. The surprise is the globalist elites in Davos seemed bullish on crypto and cognizant that any regulation must be carefully crafted to protect innovation and decentralization. The proof is always in the pudding, but they’re at least speaking about the topic in better terms than what you hear from too many in Congress.

[Last] week, at the World Economic Forum in Davos, Switzerland, [Nigel Green, the CEO of one of the world’s largest wealth management firms, deVere Group] urged world leaders and influencers to address the issue of cryptocurrency regulations.

“The time for endless platitudes on greater regulatory scrutiny is over. Action is required,” he said in a statement. “Should those in attendance at the WEF not advance the agenda of crypto regulation as a result of the 2023 summit, they will have spectacularly failed.”

Green offered three reasons the globe’s leaders need to get serious about crypto regulation:

1.    Crypto’s growing role in the financial system

2.    The need for greater scrutiny to protect investors in the wake of collapses like Three Arrows Capital and FTX

3.    The importance of boosting economies in emerging countries

Any regulatory framework must balance protecting investors and the financial system with the decentralized nature of digital assets and the need for freedom to innovate, according to Green.

Green also recently commented on the recovery in digital asset prices, noting that the recent crypto winter appears to be thawing.

“Of course, the crypto market will not go in a straight line – no market ever does – but we expect the bears to go into hibernation and bulls are ready to run,” he said in comments made over the weekend.

Emphasis ours. Perhaps this is less than we wanted, but the mindset is better than we expected.