The cryptocurrency market suffered another shock decline on Tuesday, as the total market valuation slumped nearly 30 percent over the previous seven days to reach $155 billion. But Michael Ou, founder and CEO of card-sized hardware wallet developer CoolBitX, believes the market will rise again, particularly once various countries interested in anti-money laundering regulations take steps that would help restore investor trust.
“I’m 100 percent confident in saying that once the crypto market is AML [anti-money laundering] compliant, we can see the next all-time high again soon,” Ou tells Inverse. “It’s going to take six months to probably a year for a few pioneer countries to actually put that new AML requirement in place.”
Ou sees such legislation as key to a reversal. Bitcoin and similar cryptocurrencies keep track of all transactions on the public blockchain. It’s harder to spot, however, who is behind each address. While governments can legislate to ask exchanges to track movements in and out of fiat currency, it’s harder to do the same for crypto-to-crypto. Anonymity has led to accusations that Tether was used to manipulate the price of bitcoin.
“I withdraw crypto, say from Coinbase, and I can transfer my bitcoin from my wallet to any other wallet I like,” Ou says. “With current practices, they can say where those coins go and which addresses it goes to, but the fact is, this tracing doesn’t really tell the authorities who are the actual holders of those addresses.”
A cryptocurrency market with a more government-friendly approach, one that can track who is behind each coin transaction, could encourage greater investment. Ou is working with a number of companies on this issue, as well as regulators in Japan, Korea, Taiwan and the European Union. Because of this, he’s confident that the market will turn around “maybe one year at the longest.”
It’s a small glimmer of light many proponents see as a potential respite from an otherwise brutal bearish market. Bitcoin, the largest cryptocurrency with 53.2 percent of the market, dropped to just $4,770 per coin, 25 percent down from its price of $6,370 seven days prior. Bitcoin’s losses, 78 percent down from its mid-December peak of nearly $20,000, make it its third-largest decline in history:
Around 12 months ago, American bitcoin buyers were sharing tales of their gains around the Thanksgiving dinner table. This was reflected in the warm headlines around that time:
Then again, to put the recent slump in greater context, bitcoin investors who bought as recently as September 2017 — a point where bitcoin prices fell below $3,000 in response to an initial coin offering crackdown in China — would still have been able to come close to doubling their money had they held this entire time. Whether bitcoin can soar to the same heights in did last year, however, remains to be seen.
The author of this story has a stake in bitcoin and Ethereum.