It’s no surprise that over this past decade, the incredible evolution of the internet has drastically shifted the landscape in almost how we go about almost every aspect of our lives. From ordering food, getting a ride to a friend’s house, navigation, and now even bank transactions, the need for businesses to rapidly adapt can quite literally either mean their success or quick demise. The COVID-19 pandemic has only accelerated this trend, as more people are demanding ways to avoid human contact if they can help it. Joyce Chang of J.P. Morgan says that with fintech, and especially cryptocurrency, we are seeing an increased battle between banks and fintech to become people’s preferred method of transacting in the digital currency space.
One of the biggest culprits of explosive growth is the world’s most popular crypto, bitcoin. In just this year alone bitcoin has seen a 66% jump in value and an overall increase of 452% over the last year. Chang adds by saying that there’s demand not only from millennials, but also investment bankers for the first time ever. These are two hugely influential and important groups of people to derive demand from, giving this all the more credibility. As for one, millennials are from about 25 to 40 years old, making them a large chunk of young adults that largely understand how technology works. And two, investment bankers getting involved shows that there is a lot more confidence from professionals that bitcoin is a reliable investment, as its high volatility has been a turn off for many.
This huge surge in demand and interest in fintech, but cryptos specifically, also comes with reasons to be concerned. Chang says “We also are concerned about valuations here. We’ve seen that just $11 billion of inflows since last September, which is a high number for bitcoin, has increased the market cap by $700 billion.” This high volatility, huge demand, and being a fiat currency means that a crypto bubble could very much be forming. It wouldn’t be the first time either, as bitcoin has crashed in the past, just at a much smaller scale than it would if it is to crash today or in the near future. Cryptocurrency isn’t invincible, as this past Thursday major stock indexes saw losses, and crypto ended falling about 5%. It’s only a matter of time to see if a crash of cryptos will happen, and if it does will it be its own demise or because the larger market as a whole gets hit.