The great crypto crash, or just the usual crypto summer sale? 

Recent turbulence in the crypto market has caused some speculation that the industry is on the edge of collapse. James Burnie, Financial Services Regulation & FinTech Partner and Holly Joseph, Legal Trainee, Crypto, give their expert insights into the matter. 

The UK crypto market has recently dropped in the last few days by around 10 to 15%, leading to the usual panic and drama around a ‘plunge’ or a ‘price crash’. Whilst this sounds dramatic, it is only those not used to the world of crypto that are panicking.  

Those who have been involved in crypto since the start know what we’re seeing is barely a ripple. In 2011, bitcoin dropped 99% in light of the Mt Gox insolvency. In 2013, and again in 2017/18 bitcoin dropped over 80% – and indeed, as recently as 2021 there was a drop of over 50%. Against this backdrop, a 15% crash hardly feels like a ‘crash’ and more like an average day in the office.  

Whenever there is a downturn in the crypto markets there always seems to be a need to find ‘the cause’, which is matched only by the number of different causes offered with total confidence across the community. Recent events that participants feel have contributed to drops include; sell-offs in connection with the winding up of certain exchanges; governments cashing in their reserves; and the fact that markets generally are in a downturn.  

What is more interesting is the future. Currently, all eyes are on the USA where there is a cultural paradigm shift towards greater acceptance of the concept of crypto. Traditionally, companies approaching the US have been caught between the competing forces of being required to declare their products securities and an unforgiving securities framework which made it practically impossible to legally operate. A slow, and expensive, death.  

Yet, holders of crypto are one of the largest growing voting demographics in the US – and one that is very minded to vote for change. It is therefore little wonder that Donald Trump appeared at a Bitcoin 2024 in Nashville recently to show his support for the industry. This was followed by reports of Kamala Harris seeking to reach out to the crypto industry with a view to trying to remove the “anti-crypto” association of the Democrat party. It is clear that crypto is popular. And for politicians, popularity matters.  

In light of this, we are seeing a large influx of projects setting up ready for the anticipated bull market at the end of the year, particularly those looking to demonstrate effective MVPs to be ready for when the US markets open up. For crypto, and Web3 generally, the future looks promising.