It's been a strenuous year for the crypto business. After hitting a high of more than $68,000 in November 2021, bitcoin has plunged to hover around $20,000.
But for long-term ETF investors, some experts advise to take crypto's comedown in stride.
"If you're going to do this right, then what's been happening in the past nine months is totally irrelevant," Ric Edelman, founder of Edelman Financial Services, told Bob Pisani on CNBC's "ETF Edge" on Monday.
"If you're investing for the next five to 10 years, this is just an ordinary blip in the marketplace, and you ignore it," he added.
But with bitcoin coming off a nearly two-year low, the short-term temperaments are being met with a mix of positive and negative factors that are guiding where the crypto community goes from here.
"It's a really dynamic moment in the market," Matt Hougan, CIO of Bitwise Asset Management, told Pisani on Monday.
A massive technical upgrade in ethereum is a constructive force for the future of the world's second-largest blockchain, Hougan said. A wave of institutional investors coming into the market, and an influx of venture capital activity are also forward-looking indicators for crypto's future.
On the flipside, regulatory pressures from the Federal Reserve and the Securities and Exchange Commission are working against it.
"That's creating this volatile market where crypto is going up and down and can't quite figure out which way to go," Hougan said. "And I think we're probably stuck there, at least through September."
Edelman explained that for institutional investors to engage with Wall Street firms, endowments and pension funds, regulatory and legislative rules need to be in place.
"The adults in the room recognize that regulation is a good thing," Edelman said. "Right now, we have 1% engaging in crypto. You're not going to get the other 99% until they have clarity on what the rules of the road are.
"We're seeing new rules coming out from the Treasury, IRS, FINRA and from the Fed," he said. "And from the SEC and CFTC. We've got over 50 bills in Congress right now. And all of this is very healthy."
SEC Chair Gary Gensler has said the agency should have a major enforcement role in crypto, particularly for tokens. In a speech this month, Gensler sounded a warning signal to organizations he believes are violating existing securities laws, asking staff to possibly "fine-tune compliance for crypto security tokens and intermediaries."
"I think there was a pretty direct threat against crypto trading venues – large-scale entities like Coinbase," Hougan said. "They're clearly on his horizon."
In July, shares of the crypto firm tumbled after it was announced that it was facing an SEC probe into whether the platform offered unregistered securities.
"I'm happy to say it again and again: we are confident that our rigorous diligence process — a process the SEC has already reviewed — keeps securities off our platform," said Coinbase's chief legal officer Paul Grewal on Twitter.
Proposals for more SEC oversight of the crypto community are likely to be met with hostility from the community itself, although the agency has already taken steps to enforce its regulatory agenda.
In February, the SEC charged BlockFi Lending with failing to register the offer and sale of its retail crypto lending product. The firm agreed to settle the charges, paying a $50 million penalty and ceasing unregistered offers and sales of the lending product.
"A year from now, the large trading venues will be in the process of registering with the SEC," Hougan said. "I think individual tokens, it's a much longer term."
Although the speculative assets have a challenging path forward, Edelman said the number of people who own cryptocurrencies continues to be a steadily rising figure.
"What's interesting is that, despite the fact that [Coinbase is] down 70% from its high, the number of people who own it is unchanged," he said. "Which means that those who wanted are not fazed by this."
Beyond the crypto community, rates of adoption from large investment firms demonstrate that digital currencies are being embraced by Wall Street, Hougan said.
"Blackrock and Schwab coming in reinforces to everyday investor that bitcoin is not going away," Hougan said. "I think that's now been settled. It's now how big is that future."