Crypto Use Explodes, Data Will Help Investors Make Better Decisions

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Cryptocurrencies have opened a new era in global finance. Now, people can own decentralized assets that don't rely on a central authority to have value. The new asset class has taken the finance world by storm and is fast gaining popularity in many nations.

Two major cryptocurrencies, Bitcoin (BTC) and Ethereum (ETH) have logged new highs in 2021. Bitcoin’s price has hit a new all-time high at $66,974.77. Its price has more than doubled this year, and ETH's performance has been even more impressive.

Cryptocurrencies are a transformative technology. They are revolutionizing a number of industries. Although many governments have started regulating them, investing in cryptos is on the rise.

While many investors are buying into the markets, analytical tools are lagging behind investor interest. This has led to high levels of investment in just a few tokens and a lack of diversification. More options are needed when it comes to market data, especially from a regulatory perspective.

Cryptos Enter the Mainstream

Although cryptocurrency has gained major attention over the past few years, there are some big hurdles preventing mass adoption. Unlike the traditional currencies, the value of most tokens changes minute by minute — rumors, regulatory uncertainties, or speculative raids on the market all impact prices.

Crypto doesn’t rely on a third party to operate, but many centralized crypto exchanges have popped up since 2015. As the legal framework for crypto trading has evolved, first-movers in the space have been shut down, especially in countries like China.

In other nations, crypto exchanges have been affected by the emerging regulatory environment. Indian exchanges have been on a roller coaster ride with the regulation in the nation, while exchanges in the USA have adapted to new regulations.

In addition, security is a concern. Scams and hacks are common in the cryptocurrency world. The recent “Squid Game Token” scamis a perfect example of how scammers can make fast money from crypto investors.

In the world of decentralized tokens, there aren't many good ways to enforce Intellectual Property law. The Squid Game Token creators were able to use the popularity of the show to sell tokens and then run away with all the proceeds.

Clearly, it is very important to ensure that investors have access to accurate data about blockchain transactions. The financial side of the crypto markets has led development up to this point, and now it is time to support blockchain data analysis.

Regulators will also be able to better understand the blockchain markets with accurate data. Many early crypto adopters don't like regulation in the markets; however, larger investors will likely think better of cryptos with effective regulatory structures entering the marketplace.

The Rise of Data Analytics

Data analytics has been extremely valuable in the established financial markets. By collecting and analyzing market data, valuable information can be found. In some cases, this means great trades, and in others, it means early detection of market malfeasance.

From a broader perspective, modern businesses have increasingly adopted data analytics systems, which increased from 17% in 2015 to 59% in 2018. The more information that’s available to a company, the more easily it will be able to reach accurate decisions.

Data analytics can be used in many different areas. The combination of blockchain technology and advanced analytics has proven useful so far. Chainalysis has been a vital part of many law enforcement actions in the crypto space.

Of course, transparency is a key component of investor trust in a market. Not only does accurate data help regulators, but it can also be a big help to investors. A newcomer to the market, DeFy Trends, is working with both on-chain data as well as broader data collection tools to help investors.

Analytics Will Help Alleviate Crypto Uncertainty

In addition to helping traders to understand the market trends, data analytics also helps to reduce fraud and increase security in the crypto markets. People need to know that trades can be tracked, especially when they are decentralized.

The fear of scams prevents many people from investing in cryptos. Through constant monitoring and data collection, it is easier to identify scammers and trace their funds after a scam.

Data analytics can use tools to collect information through social media platforms, as well as to analyze traders. With this information, it is much easier to predict market trends.

While there are many ways to use data analysis in the blockchain space, there are few companies that are developing deep platforms to leverage the data on public, decentralized blockchains.

Not only will the companies that are developing platforms are to likely be rewarded in the future, but the market as a whole will benefit from their efforts.

Vested Interest Disclaimer: The author holds tokens in Defy Trends. The opinions in this article belong to the author alone and should not be considered investment advice.