Prior to the chaos of 2022, the market for digital assets had already seen two “crypto winters,” and investing during these times of market stress has historically yielded extraordinary returns, according to a research report released on Monday by brokerage firm Bernstein.
According to Bernstein, the largest cryptocurrency, Bitcoin (BTC), is up nearly 60 times from its low in 2014 and about five times from its low in 2018, despite a decline last year. Likewise, despite a 68% decline in 2018, the price of Ether (ETH) has increased 14 times since its lows.
The study noted that the cryptocurrency sector has a proven track record of rising from its troughs and “taking punches when down.” However, according to the paper, the microenvironment may be argued to be different this time.
According to Bernstein analysts Gautam Chhugani and Manas Agrawal, the crypto sector is likely one of the few sectors that can have growth comparable to that of frontier technologies in a generally aging tech landscape. They also noted that because less than 5% of all internet users use cryptocurrency, there is still a large window for application-led growth.
“Crypto is probably among the few industries that can clock frontier-tech-like growth in a broadly maturing tech landscape,”
According to the report, the company recommended investors keep concentrating on the long-term consumer acceptance of cryptocurrencies, which should parallel the expansion of the internet as blockchain applications gain in popularity.
With gaming, social media, and non-fungible-token (NFT) based digital commerce and branding dominating adoption, Bernstein predicts the monthly user population of blockchains to rise by up to 100-fold over the longer term as they scale up and applications develop.
The report went on to say that the crypto business should concentrate on expanding the market by agreeing to a few “regulatory trade-offs” that would attract greater funding and mainstream participation.