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Volatility Is Here To Stay: Unlocking the Central Role of AI and Blockchain Convergence in the Crypto Sector

Last Updated December 28, 2023 10:29 AM
Giuseppe Ciccomascolo
Last Updated December 28, 2023 10:29 AM

Key Takeaways

  • Volatility is a natural feature of the cryptocurrency market, and it is likely to remain so in the future.
  • The convergence of AI and blockchain is creating a new era of crypto innovation.
  • A Web3 fintech company founder and CEO shares his views on AI, blockchain, and crypto for 2024.
2023 was a game-changing year, not just in terms of asset prices and capitalization, but in terms of structural changes to the industry.
While some see these changes as a sign to stay away from the risky world of blockchain, Ilya Volkov, CEO and co-founder of Web3 fintech platform YouHodler , sees them as healthy growing pains as Web3 technologies continue to mature: regulatory advancements like the MiCA framework, traditional institutions’ increasing interest in crypto ETFs, and some tech giants’ adoption of the blockchain technology.
Most remarkably, 2023 witnessed a deeper integration of decentralized finance (DeFi) with traditional financial systems, which further paved the way for more convenient and innovative financial solutions for the world.

Regulation Continues To Solidify

Regulators are increasingly gaining insights into the dynamics of the cryptocurrency space and its intersection with traditional financial markets. Recognizing the need for balance, they are reinforcing oversight through the introduction of innovative rules and policies. This proactive approach contributes positively to the overall health of the financial ecosystem.
Emerging frameworks such as MiCA and the recently unveiled FINMA Guidance on Staking Services in Switzerland are instrumental in fostering a more robust and sustainable crypto industry.
“Obviously, there are still challenges as governments around the world look for ways to keep the industry innovative while also in compliance. However, I’m confident that we will figure out some better solutions in 2024,” Volkov said.

Consolidation Of Traditional And Web3 Fintech

A growing number of financial institutions are embracing crypto and Web3 technologies, signaling a notable shift in the industry landscape.

Noteworthy examples include Raiffeisen Bank Austria and state banks in Switzerland entering the crypto space, while major players like Societe Generale are diversifying into stablecoin operations. Beyond a mere influx of traditional entities, this trend reflects a wider consolidation pattern.

A key facet of this transformation is the increasing reliance of major financial institutions on technologies pioneered by crypto-native companies. For instance, Raiffeisen Bank’s crypto service integrates seamlessly with Bitpanda, a regulated Austrian crypto exchange, and Swiss banks are tapping into crypto offerings and blockchain-supported infrastructure.

Simultaneously, service providers are tailoring custody solutions specifically for banks, mirroring offerings from industry leaders like Metaco and Ledger. Fintech companies such as YouHodler are also broadening their portfolios to cater to B2B or B2B2C partnerships, providing retailers with a suite of tailored services.

“In 2024, these collaborations will become even more prevalent, indicating a significant shift in the financial industry,” YouHodler CEO added.

CeDeFi Solutions Powering Web3 Fintech

The dynamic convergence of cryptocurrency and traditional financial institutions is poised to capture increasing interest across companies of various scales. In the unfolding landscape of Web3 fintech, the emergence of “CeDeFi solutions” stands out as a secure and innovative alternative to conventional practices.

In essence, these solutions harmonize the benefits of decentralized finance—such as earning interest on cryptocurrency assets, facilitating streamlined trading, and providing access to loans—with the stability and regulatory safeguards associated with established financial institutions.

Acting as a bridge, CeDeFi offers a nuanced approach to addressing numerous contemporary challenges in the financial industry.

BTC Halving And Institutional Involvement

The forthcoming BTC halving marks a distinctive departure from its predecessors, characterized by a substantial increase in the participation of institutional investors.

In contrast to prior instances when their involvement was cautious and peripheral, institutional players are now demonstrating a more substantial commitment to the crypto market.

“Many analysts predict that the upcoming bull run will be driven primarily by these institutional players, and I agree with that.”

Crypto Spot ETFs Are Coming

“The introduction of spot ETFs will mark a pivotal moment for many investors previously hesitant to enter the crypto market,” Volkov said.
The widespread approval of these exchange-traded funds (ETFs), which is likely to happen in early 2024, is expected to attract a new segment of informed and strategic investors, who will bring a considerable amount of “smart money” into the market. This will profoundly transform the crypto investment landscape.

Volatility Is Here To Stay

“The crypto market, while more stable than in its early days, is still notably volatile. As we head into 2024, I believe this trend will continue, particularly with the rise of emerging technologies like AI.”
According to Ilya Volkov, AI’s integration into blockchain represents a significant development. Projects effectively leveraging this synergy can attract substantial venture capital investment.
This influx of new capital will benefit the industry but also introduce further uncertainty and volatility.
“That said, I’m optimistic about the future. The convergence of AI and blockchain technology will create many new opportunities, as well as new jobs,” Ilya Volkov concluded.


Please note that the contents of this article are not financial or investing advice. The information provided in this article is the author’s opinion only and should not be considered as offering trading or investing recommendations. We do not make any warranties about the completeness, reliability and accuracy of this information. The cryptocurrency market suffers from high volatility and occasional arbitrary movements. Any investor, trader, or regular crypto users should research multiple viewpoints and be familiar with all local regulations before committing to an investment.

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