The cryptocurrency market has experienced a tough start to the year, with the first quarter representing the worst for bitcoin. Yet some analysts believe that the market will grow as it becomes more mature this year as volatility decreases.

The market capitalisation of the digital currency market is currently valued at $258 billion, according to CoinMarketCap, at the time of publishing, representing a more than 60 percent drop since the start of the year.

Bitcoin is trading at $6,736, which has fallen nearly six percent in the last 24 hours, whereas ethereum is trading at just under $400, at $397, a drop of 5.08 percent in the same time frame.

According to Adrian Lai, founding partner at Orichal Partners, a cryptocurrency investment firm in Hong Kong, increased regulation will reduce market manipulation and volatility and boost participation. In a report from the South China Morning Post, Lai said:

Regulators are not banning the development of cryptocurrencies, but are trying to better regulate the market, which should help the industry mature.

Governments are already stepping up efforts to bring better control of the market as they work at stamping out fraud within the nascent industry. In December, Jay Clayton, chair of the U.S. Securities and Exchange Commission (SEC) said that a ‘number of concerns have been raised regarding the cryptocurrency and ICO markets,’ adding that:

…there is substantially less investor protection than in our traditional securities markets, with correspondingly greater opportunities for fraud and manipulation.

With regulations in place Lai is of the opinion that large funds will be more assured and willing to commit significant capital. Furthermore, a survey by Huobi, a Beijing-based cryptocurrency exchange, found that 78 percent of more than 1,800 respondents from 23 countries think the market value of digital currencies will rise within the next three months. A further 88 percent of investors remain bullish of the direction the market will take, with 88 percent indicating it will increase in size.

With bitcoin’s market value down to $114.3 billion, it remains to be seen if these bullish investors are right.

Featured image from Shutterstock.

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