Joey Krug, the Chief Investment Officer of Pantera Capital, one of the largest cryptocurrency investment firms, spoke with Bloomberg about the state of cryptocurrencies, showing optimism that digital currencies will soon bottom out, with the cryptocurrency market rising ‘10x’ in the next bull run. He claimed:
If you look at that next bull run, I think the crypto space overall could hit 10x from here.
Crypto market waiting for a catalyst
When asked if the cryptocurrency has reached a bottom, Krug said that ‘we are close to the bottom at this point’, further adding that the market is waiting for some catalyst to rebound.
Need for increased scalability
However, Krug believes that there needs to be increased scalability of cryptocurrency network for such incredible growth to happen to the crypto market. Speaking about this, he explained that:
If you look at the internet, it’s easy to say, ‘Well, you just create an app, get some users, and then you solve the scalability problems.’ But these are all markets, and so if you don’t have scalability, you don’t have market makers, and so you don’t have liquidity.
An example of blockchain scalability includes the Bitcoin Lightning Network (LN), where users can distribute funds off-chain into LN payment channels. The LN is a second layer operating on top of bitcoin that is a federated bitcoin sidechain. Regular users, financial institutions, and crypto exchanges are expected to use the LN if they want to move huge amounts of bitcoin quickly and privately.
Some networks to achieve Visa/MasterCard transaction speeds in a few years
Although Krug noted that most blockchains are not ready for the primetime, he expects some cryptocurrency networks to scale and be able to deal with transaction speeds as high as what Visa/MasterCard deal with within the next few years.
Krug also stated that it’s expensive to get fiat into cryptocurrency today, and expressed hope that this will change a lot in the next 6 to 9 months.
Major financial industry players entering the crypto space
Although major cryptocurrencies have been struggling to break crucial resistance points, the adoption of crypto is expected to rise, with big financial industry players such as Intercontinental Exchange (ICE) and Fidelity Investments entering the crypto space. Some cryptocurrency enthusiasts believe that if concrete adoption from both retail and institutional investors is fuelled by such big names, then there’s no doubt a bull run will be catalysed.