The collapse of NFTs, the death spiral of Luna, and a tumble in cryptocurrency prices across the board have impacted ETFs that have invested in and around blockchain technology.
Despite the parade of bad news, there’s plenty of reason to be optimistic. As Marcus Sotirou, an analyst at digital asset brokerage GlobalBlock, told CNN, “Even though sentiment is very, very negative at the moment and it all seems all doom and gloom, the actual fundamentals of crypto haven't changed.”
Indeed, it appears that there are some reasons for optimism. Miners are rebounding as crypto prices stabilize. Crypto has had multiple resets over its life and has always returned stronger and better for it. Some experts, such as Ben McMillan, founder and chief investment officer at IDX Digital Assets, compared the recent crypto slide to the dotcom rout of the early aughts, noting that it was “ultimately good for the space.”
“It reminds me of back in the 2000s, the selloff of both Pets.com and Amazon.com. They were both down over 80%. One of them went out of business, while the other one went on to become an industry leader,” McMillan said, adding that it wouldn't be surprising to see bitcoin “getting back to even for the year, maybe even a little bit positive.”
Blockchain Is the Key
The “currency” part of “cryptocurrency” obscures the real star — the blockchain. "Ninety-nine percent of cryptocurrencies aren't trying to be currencies — they're trying to be assets behind these blockchain networks," Sotirou noted. "And I think that it's only a matter of time before all businesses integrate blockchain in some form of way."
ETFs like the Amplify Transformational Data Sharing ETF (BLOK) are likely to thrive in the long term as Blockchain technology continues to come into its own. BLOK invests 80% of its holdings in companies that are actively involved in the development of blockchain technology.
Blockchain has the potential to meet several societal needs outside of peer-to-peer transactions or storing digital wealth. Its ability to act as a ledger makes it useful for the real-time tracking of goods as they move through the supply chain, allowing companies to queue up events within a supply chain and optimize. Given the current state of supply chains, this could help tremendously.
Another possible use is in healthcare. Currently, healthcare suffers from a siloing of data. Different health insurance companies, doctors, and specialists struggle to connect, creating a fractured image of a patient’s medical history. Imagine a world where all sorts of medical data could be safely stored and easily accessed by healthcare professionals while also benefiting from the privacy protection blockchain offers.
It also has utility in spaces like real estate. Expediting home sales through quick financial verification could simplify a complex process and reduce the potential for fraud.
There are even potential civic applications for the technology. Taxes immediately jump to mind as being something that could benefit from the efficiency, expediency, and privacy protection blockchain offers. Even something like voting could be revolutionized. Voting on the blockchain could expedite the process and make it more accessible to larger groups of people, as well as allow for quicker tallies.
Cryptocurrencies will likely also recover, but it's important to remember that it is the technology that is going to drive the innovation.
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.