So where is this all going? Are we really going to say goodbye to cryptocurrencies in 2022?
Over the past three months of trying hard, the cryptocurrency market has lost over US$1 trillion in market capitalization. The impact has been so intense that major cryptocurrencies including Bitcoin and Ethereum have almost shed half their value from their all-time highs. According to some experts, cryptocurrencies show no signs of recovery in the near future. This ultimately sparked panic among investors as a “crypto winter” approached. So where is this all going? Are we really going to say goodbye to cryptocurrencies in 2022?
Bitcoin has fallen to US$32,000 in the past few weeks from its all-time high of US$69,000 in November 2021. On the other hand, the value of other major cryptocurrencies has also fallen significantly. The constant knocks in the cryptocurrency market have dampened major initiatives such as institutional investments, fixed regulations, and easy-to-trade models. Currently, the decentralized sphere is left behind. Although many factors are contributing to the current crisis, no one can take responsibility or anything to put the market back on the path to recovery. On the sidelines, investors are also haunted by fears of “crypto winter”. Commonly associated with the bitcoin market slowdown between late 2017 and late 2018, crypto winter refers to an extended downtrend where digital tokens fall consistently for many months. Over the past crypto winter, the price of Bitcoin plunged over 84% and a majority of altcoins also fell in unison. Although the price crash may not be so devastating now, cryptocurrency investors fear that it may be if Bitcoin and Ethereum continue to face consistent falls.
Bitcoin is incredibly bullish and shows no signs of recovery
Even though Bitcoin started 2022 on a bad note, investors seemed to be happy about it. Long-term BTC investors are well aware that uncertainty and bearish trends are very common in the cryptocurrency market. However, Bitcoin’s value appeared to be on the road to recovery in early February, creating a bullish outlook among investors.
When Bitcoin’s price hit the US$45,000 range, investors thought their long wait was coming to an end and the major cryptocurrency could deliver on its promise of hitting US$100,000 before the end of the month. ‘year. Unfortunately, their hope was dashed when Bitcoin broke through the resistance level of US$32,000. Also, the price does not seem to be stabilizing anywhere or finding a corner to rest on.
Ethereum is also in play
Yesterday, Ethereum price fell below US$3,000 and is now heading towards the long-standing US$2,800 mark. Its drop below US$2,200 on January 24 was Ethereum’s lowest price since July 2021. After breaking above US$4,100 in December, Ethereum has struggled to stabilize anytime soon. However, experts still urge investors to ignore highs and lows as they might be a brief intrusion.
Why are prices dropping drastically?
A plethora of factors contribute to the troubling price of cryptocurrency. One of them is the sudden movement of Bitcoin from old wallets. Investors are unsure if this indicates any significant Bitcoin sales from these wallets in the near future. On the other hand, we also have the Federal Reserve proposing an increase in interest rates. Eventually, many countries tightened or imposed strict regulations on cryptocurrency trading. Some like India have imposed taxes on cryptocurrency profits.
So, will cryptocurrencies disappear in the near future?
There is less chance that cryptocurrencies will soon be eliminated from the financial sphere. Even though cryptocurrencies are unstable, the underlying blockchain technology is making waves. Also, other disruptive concepts such as decentralized applications, NFTs, smart contracts, etc., backed by blockchain technology, are taking center stage recently. Therefore, cryptocurrencies are very unlikely to vanish into thin air this decade.
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