Last week, the headline from an interview with Marius Reitz, was: “We see a lot of greed in the market”, says Luno Africa GM. Within the interview, he also noted that emerging markets have been driven by retail demand, even noting that the data is showing that people buy “a set amount of Bitcoin on a monthly basis on payday.”
“The headline of this interview — greed in the markets — really doesn’t adequately delve into the nuance we see, especially within emerging markets, including most of the African continent,” noted Richard Gardner, CEO of Modulus, a US-based developer of ultra-high-performance trading and surveillance technology that powers global equities, derivatives, and digital asset exchanges. “It isn’t so much that the interview didn’t note other elements at play, but the narrative that greed is the primary reason for the crypto-explosion… it just doesn’t hold up.”
“If we want to look at greed in a marketplace, look no further than the NFT craze we’ve witnessed this year. Granted, those buying in are probably largely a result of wanting to be an early adopter of a new tech phenomenon. But, it could be argued that those selling the NFTs are driven by greed,” Gardner conceded. Last month, the New York Post wrote a story on Alex Ramírez-Mallis, a film director who launched, and successfully sold pieces of, an NFT collection featuring his quarantine farts.
“But NFTs are a whole different ball of wax. When you’re looking at the cryptocurrency boom, there are so many factors at play, and it is hard to say that any one driver, in particular, is the culprit. For example, institutional investors drove up prices initially, but to say that their action is not still motivating Main Street would be shortsighted. Many retail investors saw the big guys getting in, and they said, ‘heck, if it’s good enough for BNY Mellon, it’s good enough for me.’ When they see Mark Cuban and Elon Musk and even Mr. Wonderful, Kevin O’Leary, backing crypto, the industry really begins to be rebranded. It no longer appears to be fringe,” said Gardner.
“In emerging markets, though, and in particular, some of the African markets like Nigeria, where we’re seeing high inflation — that’s a driver in and of itself, moving the folks towards cryptocurrencies, which are being viewed as a refuge against the struggling Naira. Bitcoin, and more generally cryptocurrencies, are billed as an alternative currency. People bandy about ideas discussing whether or not it will eventually overtake the dollar as the global reserve currency, but those discussions are mostly academic when compared to the real world struggles that the citizenry, in places like Venezuela and Nigeria, are having with inflation. For those dealing with hyperinflation, they’re not looking at fundamentals or the quality of technology behind a particular digital currency. They’re looking at where they can put their savings so that, next month, it isn’t worth significantly less. That’s a strong motivator, and it is the elephant in the room when we talk about regulation in countries with high inflation, too,” said Gardner.
Modulus is known throughout the financial technology segment as a leader in the development of ultra-high frequency trading systems and blockchain technologies. Over the past twenty years, the company has built technology for the world’s most notable exchanges, with a client list which includes NASDAQ, Goldman Sachs, Merrill Lynch, JP Morgan Chase, Bank of America, Barclays, Siemens, Shell, Yahoo!, Microsoft, Cornell University, and the University of Chicago.
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