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Is crypto dead, or is it just sleeping?

Many believed that cryptocurrencies could be a hedge against high-interest rates and inflation. Unfortunately, cryptocurrencies have experienced considerable dips in the past months and years. It was a real rollercoaster regarding their prices, especially the bitcoin price.

You could hear from Wall Street investors comments like ” crypto is dead ” and ” crypto is finished .”But is it true? Is crypto dead, or is it just sleeping? 

 This article covers everything you need to know about the crypto market perspective and the current crypto landscape. Keep reading and find out more.

Is crypto dead – Why did crypto crash?

So what’s the reason for the crypto industry’s downward trajectory? As you will see, many factors of its downward path are larger than the market itself. 

General value decrease of cryptocurrencies, namely Bitcoin, is connected with consumed purchasing power and the gloomy global economy, entailing that investors are less prone to risk on crypto assets.

Cryptos are high-risk investments, and therefore they dry up once momentum disappears. And when that happens, investors are in search of less volatile assets.

Another important factor affecting the cryptocurrency market’s downward path is people’s lost trust in it. As quite a new technology and cyberattacks, product failures affect the whole sector. Finally, two crucial events happened recently and are still affecting the market. 

These are the collapse of terra luna and FTX’s bankruptcy. The first happened in early 2022 when LUN, one of the top ten cryptos by market cap, lost all of its value. 

FTX was one of the most popular and reliable cryptocurrency exchanges until its operators mismanaged and overleveraged investors’ funds. And it led this crypto exchange to a loss of $3 billion in assets. So the company filed for bankruptcy. 

Is crypto dead – how bitcoin’s value multiplied

is crypto dead? : bitcoin

To answer this question, you need to understand the advantages of blockchain, decentralized transaction ledger, or token financing.

Imagine: the first promised to eliminate counterfeiting by replacing an outdated banking system, the second intended to eradicate fraud in the global financial system, and the third promised to finance new businesses by creating your own digital currency. The revolution!

Dumbfounded by these mirages, investors rushed to bitcoin. Result: its value multiplied by 10 in six months, reaching a peak of US$19,650 in mid-December 2017. The plunge that followed lasted a year. 

After a jump in 2019, bitcoin did not rise again until the middle of 2020, but investors got carried away again: its value reached new heights before the end of the year, but this time, it still goes on. We don’t know when it will end.

This is probably the main change between 2018 and 2021: at the time, it was presented as a package of exotic technologies, difficult to understand. 

This time, bitcoin has found an easier role to grasp: it seeks to become the reference tool for exchanging international currencies in a digital and dematerialized economy where safe havens such as gold have less relevance.

In 2021, buying bitcoins and investing in major cryptocurrencies are two sides of the same coin. If experts do not see this digital platform replacing money to pay for groceries, some believe that it qualifies as a digital asset with a certain value that fluctuates, and even fluctuates a lot, over time.

 At what price is bitcoin “expensive”?

This is another bitcoin problem: no one agrees on its real value. Difficult to make projections on its value in one year, in five years, or in 10 years.

The most optimistic compare the price of bitcoin to that of gold. Today, if all the gold in the world is worth 10,000 billion dollars, it is not because it is used to make jewelry but because, over time, it has become a reference for establishing the value of other goods and currencies. 

The only thing bitcoin does at this moment is to bring this reference value to the digital world. We don’t know how much a bitcoin is really worth. 

There’s a ripple effect that’s inflating its value right now, but the frontrunners will be rewarded in the long run. Bitcoin has the potential to be big.

Importantly, there is always a risk that it will not happen. In investing, risk and return go hand in hand, recalls the portfolio manager. The greater the risk, the more promising the return.

Towards a new bubble?

is crypto dead?

In early February 2021, Tesla bought 1.5 billion US dollars (US$B) worth of bitcoins in order, according to its CEO Elon Musk, to eventually accept payments in this currency for its electric vehicles.

Less noisy, another announcement was made a few days earlier by Visa, which has created a new tool that allows individuals at select banks in the United States to purchase bitcoin directly from their online bank account.

For the promoters of digital currencies, this was two more proofs that bitcoin is now a “general public” asset, accepted and endorsed by recognized companies. 

Elon Musk is full of praise for cryptocurrencies in general, by the way. A tweet he posted about Dogecoin when his company was buying bitcoins confirmed it: Dogecoin is a cryptocurrency that was launched as a joke in 2013 and whose usefulness is very limited, if not nothing. Its value jumped 80% within hours of this tweet.

For bitcoin detractors, this is one coin too many, a good demonstration that this is a new bubble that will burst one day.

At least that’s what American short seller Michael Burry says, who sees the whole thing as a smokescreen to distract investors from the fact that Tesla is under pressure in China, where the automaker is gambling its future. “Chinese authorities are concerned about the quality and reliability of Teslas… but Tesla prefers to buy bitcoins “, reacted Burry.

Interesting detail: Tesla’s stock market evolution and bitcoin’s value fluctuations follow roughly identical curves. Either way, analysts are at a loss for words to explain investor enthusiasm.

Tesla is only profitable because of significant federal aid in the United States. Bitcoin could become a safe haven, but nothing has yet been won.

In short, if we are witnessing a speculative bubble and the bubble bursts, not only virtual coins will fall from the sky. At least one automaker could pay the price as well.

Is it safe to invest in crypto?

EOS and Ripple’s XRP

Before you determine if it is safe to invest in bitcoin or other cryptos on the market, you need to grasp the notion of the bear market. We say that the market is bearish when the supply of assets is greater than the demand. 

Therefore, confidence decreases, and cryptos prices fall. In contrast to traditional financial markets, the crypto market is more volatile and also smaller. So it’s not unusual to see more volatile, prolonged bear markets with an 80 percent drop in price. 

However, given that it has dropped more than 70 percent from an all-time high in 2021, the bear market’s end is closer than its start.

Many enthusiasts think crypto’s vision and value proposition haven’t changed. Therefore, investing in BTC at $10,000 is not different from investing at %40 000. 

Maybe the sentiment has changed, and some even found the story about crypto becoming boring. 

Finally, it all comes down to your risk tolerance and strategy of investment. The best practice would be to stay engaged, informed, staying calm during turbulent economic times.

What cryptos will survive?

Every time crypto winter takes place, some projects still keep momentum. Many old crypto projects phase out. Innovative projects take their part of the share. 

But only two have relatively consistent track records, and they are seen as blue-chip cryptocurrencies. These two are, you guess, Ethereum and Bitcoin. 

We can say that Bitcoin is a kind of digital gold. It was created as transparent and fair money in a divided world. It’s immutable, scarce, portable savings technology. 

With the largest market cap, it is a leader of the rest of the crypto market. Ethereum stands for the most appreciated altcoin with the second largest market cap. It also has a leading position in the blockchain sector. 

There is no guarantee they will survive in the long term, but they are still the most robust value propositions.

Is crypto dead? – Conclusion

is crypto dead?

So is crypto dead, or it just seems so at times? Industry insiders say crypto isn’t dead. But that mistrust, macroeconomic factors, and lack of regulation may be why 72% of institutional traders weren’t investing in cryptocurrencies in 2022.

On the other hand, according to the PwC 2022 report, more than a third of traditional hedge funds now invest in digital assets.

After the bursting of the cryptocurrency bubble in 2018, bitcoin was given for dead. Bitcoin has suffered many crashes before, yet bottom-feeders quickly rushed into the market and sent the price rebounding. 

Media have presumed cryptos dead a hundred times so far. All that hasn’t stopped it from making a strong comeback and reaching new heights in 2021. 

If the digital asset remains risky, we strongly believe that crypto will prevail for good.



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