In 2009, Satoshi Nakamoto introduced bitcoin as the world’s first cryptocurrency. A decade later, the digital currency sector has experienced clearly-defined exponential growth in some of the most phenomenal moves seen in the history of the financial markets.

Today, even the most conservative investors are wondering if these rallies in the underlying crypto market valuation can continue. However, recent news of declining bitcoin sentiment amongst institutional investors could have an undeniable impact on the buying activity of individual traders.

Not surprisingly, market prices of many cryptocurrencies have fallen during the last few weeks as doubts have emerged concerning the viability of crypto as an investment option. At the same time, the long-term trends remain supportive and many analysts believe that the era of digital currencies is only in its earliest phases.

Remember, crypto market capitalization grew from $5.4 billion in 2014 to $128 billion in 2018. Currently, there are over 1500 digital currencies and 40 million active users around the world. It’s this growth that has attracted interest from retail investors, large financial institutions, and even government entities. Let’s take a look at some of the factors that could propel growth in the crypto market going forward.

Regulation Reactions 

Several state governments in the U.S. have made an effort to formulate and pass laws regulating the cryptocurrency market. Colorado, Georgia, and Arizona have adopted crypto-friendly laws. In contrast, New Mexico, California, and ten individual cities have warned their residents against the perils of investing in crypto.

In reality, taxation and legal requirements by U.S. regulatory agencies have largely prevented the implementation of a clear regulatory framework at the federal level. However, it’s clear that an effort is being made to create enforceable regulations in these areas.

With regulation, it’s highly likely that the sector will attract a larger number of participants. Moreover, institutional investors will feel safer operating in an industry that’s regulated. This would be a bullish outcome for bitcoin and the other major cryptocurrencies.

Acceptance of Blockchain Technology

For reasons that are relatively obvious, blockchain technology is heavily associated with the adoption of cryptocurrency. As interest in the cryptocurrency market grows, so does the attention that’s paid to its underlying technology structures.

Blockchain is a digital, decentralized ledger. It records every digital transaction precisely as it occurs. Information is stored in a shared database, making it impossible for nefarious individuals to alter the record.

Analysts have described blockchain technology as a secure, transparent, and traceable networking system. As a result, the technology can just as easily be used in other sectors (i.e banks, insurance companies, governmental department bodies, etc.).

As an example of this, the Illinois Blockchain Initiative was commissioned in 2017. It calls for a consortium of county and state agencies to “cooperate and explore innovations arising from the Blockchain and its distributed ledger technology.” (Desouza, 2018)

Continued acceptance of this underlying technology is nothing short of a mega-boost to the outlook for cryptocurrency markets. Overall, it’s clear that investors in the U.S. markets (and around the world) are slowly warming up to the ideas that support the use of crypto assets.

Regulation by governments will continue to inject confidence in the market and this will lead to accelerated growth rates in the underlying market valuation.

Love it or hate it, cryptocurrency is slowing entering into a new phase in the financial markets and its broader acceptance amongst the investment community is here to stay.

Richard Cox is a personal investor with more than two decades of experience in the financial markets. He is a syndicated writer, with works appearing on CNBC, NASDAQ, Economy Watch, Motley Fool, and Wired Magazine.