Patrick Yeung, CEO of HKGCC
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On 10 September, as the cryptocurrency market plunged to a 10-month low, Tama-Richard Churchouse told members at a Chamber roundtable luncheon that further falls were ahead.
“Almost 97% of cryptocurrencies are down 70% or more from their highs,” he said. “It is the very definition of a bloodbath, but it is far from over.”
Despite this, he is positive on blockchain in the longer term, saying that there will be a re-pricing after a bottom has been reached.
Churchouse, who was an early investor in blockchain and launched the Crypto Capital newsletter, explained how the current situation arose and discussed what needs to be in place before we see another uptrend.
On 2017’s huge increase, “To call it a bull market would be a colossal understatement,” he said. The current correction, therefore, has been no great surprise.
One reason for the explosion in value was the introduction of Initial Coin Offerings, or ICOs, which meant that anyone could create their own token.
“The vast majority of these tokens have absolutely no reason to exist,” Churchouse explained, adding that he expects the majority of them will fail.
The increase was driven by often unsophisticated investors who were simply seeking a fast profit. The “unbelievable speculative mania” and subsequent collapse has many similarities with the dot-com bubble, he noted.
As we reach the bottom, there will be a wholesale clearout and dumping of these assets. But Churchouse likened this to a forest fire, which also acts to stimulate new growth.
Regularity clarity is a hugely important factor, and as it is introduced it will lead to new ways for people to invest. He also expects to see growth in security tokens, which reflect ownership of an asset or business.
Churchouse also pointed out that we are still very early in the development of blockchain and cryptocurrencies, which means there is room for growth.
“I’m actually a blockchain enthusiast,” he said. “I’m bullish about this space.”