Bitcoin’s price could have a positive ripple effect on the broader crypto ecosystem: NFTFN

With Bitcoin hitting record levels of $72,000 on March 11, the cryptocurrency is poised to hit new highs. According to crypto market research platform Crebaco, Bitcoin is well on its way to reaching USD100,000-USD150,000 by the end of 2024. As exuberance grows, NFTFN co-founder Abhishek Kumar Gupta talks about what could drive a bigger rally in Bitcoin and what it means for the broader cryptocurrency market. Edited excerpts:

Economic Times (ET): Bitcoin levels are hitting a new high and we are now hearing about Bitcoin Halving which is expected to increase value even more. What is Bitcoin halving and why does it matter?

Abhishek Kumar Gupta (AKG): Bitcoin Halving is an event that happens approximately every four years, where the reward for mining new Bitcoin blocks is halved. This event is built into the Bitcoin protocol to control the supply of Bitcoin and maintain its scarcity over time. The upcoming 2024 Bitcoin Halving, scheduled for April 2024, will reduce the mining reward from 6.25 to 3.125 bitcoins per block.

This reduction in the rate of new Bitcoin creation is expected to have an important impact on Bitcoin’s supply-demand dynamics. Historically, each halving event has been followed by a price increase, as the reduced rate of new supply entering the market creates scarcity, which increases the demand for Bitcoin.

This scarcity effect is similar to that observed in precious metals such as gold, which are valued for their scarcity and value-value properties. ET: With the possibility of a US recession coinciding with Bitcoin’s fourth halving in April 2024, and significant interest in Bitcoin ETFs, how do you foresee these developments affecting the global cryptocurrency market’s dynamics and investor behavior?AKG: It’s a complex scenario. While a potential US recession and the Bitcoin halving could create uncertainties, other factors such as increasing adoption and the rise of regulated Bitcoin ETFs could provide support.

We may see increased volatility in the short term, but historically Bitcoin halvings have been followed by price appreciation. Investor behavior is likely to be cautious, focusing on established cryptocurrencies such as Bitcoin and Ethereum.

This could lead to a flight to quality, potentially favoring established projects with strong fundamentals. However, it is crucial to remember that past performance is no guarantee of future results.

ET: Given the projected growth of the NFT market to $231 billion by 2030 and its expansion into gaming, fashion and potentially real estate, how do you see the role of NFTs evolving in both digital and physical asset markets?

AKG: The NFT market’s projected growth is exciting. We are already seeing NFTs integrated into various sectors, such as gaming and fashion, with real estate possibly following. NFTs have the potential to revolutionize how we own and interact with both digital and physical assets.

In the digital realm, NFTs can represent unique in-game items, wearable items in the metaverse, or even music rights. In the physical world, fractional ownership of real estate through NFTs can become a reality, improving accessibility and liquidity. Overall, NFTs are poised to play a transformative role in the future of asset ownership across diverse sectors.

ET: In the wake of the FTX collapse and increased regulatory scrutiny, what are your predictions for how regulation will shape the future of cryptocurrency exchanges, wallet security and investor protection?

AKG: The FTX collapse and increased regulatory scrutiny highlight the need for clearer regulations in the crypto space.

While robust regulations are crucial to instilling confidence and protecting investors, excessive restrictions can stifle innovation. I believe we will see a balanced approach with regulations focusing on consumer protection, exchange transparency and AML/KYC compliance.

This is likely to lead to a more mature and sustainable crypto ecosystem with established exchanges implementing stricter security measures and prioritizing investor safeguards.

ET: Bitcoin halvings have historically affected Bitcoin’s price and mining economics. What impact do you expect this to have on the broader cryptocurrency ecosystem, including altcoins and the NFT sector?

AKG: The upcoming Bitcoin halving will undoubtedly affect the broader cryptocurrency ecosystem. As Bitcoin’s supply is cut in half, its mining difficulty and production rate will decrease, potentially leading to a price increase based on historical trends.

This price appreciation could have a positive ripple effect on the broader crypto market, boosting investor confidence and potentially leading to increased interest in altcoins. However, it is important to note that this is a complex ecosystem with multiple factors influencing individual altcoin performance.

While the specific impact of the Bitcoin halving on the NFT market remains to be seen, a potential rise in Bitcoin’s price could have a positive ripple effect on the broader crypto ecosystem, potentially boosting investor confidence and further can spur exploration and innovation within the NFT space. This increased interest and activity may ultimately contribute to the continued growth and maturation of the NFT market.

ET: With the integration of blockchain and AI identified as a significant trend, how do you believe this technology will transform the user experience and operational efficiency within the cryptocurrency and NFT markets?

AKG: The convergence of blockchain and AI offers exciting possibilities for the cryptocurrency and NFT markets.

AI can be used to improve security through anomaly detection and fraud prevention, while also improving user experience through personalized investment recommendations and streamlined trading experiences. Blockchain technology can provide a secure and transparent foundation for AI applications, promoting trust and reliability.

These combined innovations have the potential to make the crypto and NFT markets more accessible, safe and efficient for a wider audience. ET: As co-founder of NFTFN, how do you position the platform to drive the expected recovery and growth of the NFT leverage market, especially in high-growth sectors such as gaming and fashion?

AKG: Innovation is at the heart of NFTFN. We are constantly exploring new ways to improve the user experience and address the evolving needs of the NFT market.

Here are some potential areas of exploration:

●Develop New NFT Indices: We are exploring the creation of thematic NFT Indices focused on specific sectors such as gaming or metaverse projects based on Blue-Chip NFTs

●Expand our reach: By partnering with industry leaders, we can tap into their existing user base, introduce them to the exciting world of NFTs and expand the NFT ecosystem.

●Stay informed and adaptable: We closely monitor market trends and adapt our offerings to meet the evolving needs of the NFT community. This ensures that our products and services remain relevant and valuable to users.

ET: Looking ahead, what innovative financial instruments is NFTFN developing to address the evolving needs of the NFT market and its participants?

AKG: Innovation is at the heart of NFTFN. We are constantly exploring new ways to improve the user experience and address the evolving needs of the NFT market.

In the future, we plan to offer a variety of NFT indices, including collections such as BAYC and MAYC, to suit both conservative and high-risk traders. Our goal is to empower users with advanced features such as cross-margin support, which will improve flexibility and risk management, as well as chain order matching for decentralized, safe and efficient trading.

We are committed to innovation and plan to launch perpetual markets for Ordinals, Real-World Assets (RWAs) and traditional cryptocurrencies. This expansion will open doors for traders to explore new opportunities within the NFT and wider financial landscape.