Are we really going to say goodbye to cryptocurrencies in 2022?
During the past three months of the tough endeavor, the cryptocurrency market has lost over US$1 trillion in market capitalization. The impact was so intense that major cryptocurrencies including Bitcoin and Ethereum have almost lost half of their value from their all-time highs. According to some experts, cryptocurrencies are showing no signs of recovery in the near future. This has eventually triggered panic across investors of an approaching ‘crypto winter’. So where is this all headed? Are we really going to say goodbye to cryptocurrencies in 2022?
Bitcoin has slumped to US$32,000 in the past weeks from its record high of US$69,000 in November 2021. On the other hand, the value of other top cryptocurrencies has also come down drastically. The constant hits in the cryptocurrency market have dampened major initiatives like institutional investments, fixed regulations, and easy-to-trade models. Currently, the decentralized sphere is left in the dust. Although many factors are contributing to the ongoing crisis, nobody can take responsibility or anything to put the market on the recovery track. On the sidelines, the investors are also haunted by the ‘crypto winter’ fears. Commonly associated with the Bitcoin market downturn between late 2017 and late 2018, crypto winter refers to a prolonged bearish trend where digital tokens fall constantly over many months. During the last crypto winter, Bitcoin’s price plunged more than 84% and a majority of altcoins also fell in unison. Although the price plummet is not so devastating now, cryptocurrency investors fear that it could be the case if Bitcoin and Ethereum continue to face constant falls.
Bitcoin is Incredibly Bullish and Shows No Signs of Recovery
Even though Bitcoin began 2022 on a bad note,
investors seemed to be cheerful 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 seemed to be on a recovery path at the beginning of February, creating an optimistic outlook among investors.
When Bitcoin’s price touched the US$45,000 range, investors thought that their long wait is coming to an end and the foremost cryptocurrency might fulfill its promise of reaching US$100k before the end of the year. Unfortunately, their hope was thrashed when Bitcoin broke through the US$32,000 resistance level. Besides, the price doesn’t seem to get stabilized anywhere or find a wedge to rest upon.
Ethereum is Also at Stake
Yesterday, Ethereum’s price dropped below US$3,000 and now is heading towards the long stood US$2,800 mark. Its drop below US$2,200 on January 24 was the lowest Ethereum’s price had been since July 2021. After topping US$4,100 in December, Ethereum had a tough time stabilizing at any point. However, experts still ask investors to investors to ignore the ups and downs as they might be a brief intrusion.
Why are the Prices Drastically Falling?
A plethora of factors are contributing to the unsettling cryptocurrency price. One of them is the sudden movement of Bitcoin from old wallets. The investors are confused whether this indicates large sales of Bitcoin made from these wallets in the near future. On the other hand, we also have Federal Reserve coming up with increased interest rates. Eventually, many countries have tightened or imposed strict regulations on cryptocurrency trading. Some like India have imposed taxations on cryptocurrency profits.
So, Will Cryptocurrencies Disappear in Near Future?
There is less chance that cryptocurrencies might get wiped out of the financial sphere anytime soon. Even though cryptocurrencies are unstable, the underlying blockchain technology is the talk of the town. Besides, other disruptive concepts like decentralized applications, NFTs, smart contracts, etc, backed by blockchain technology are taking center stage recently. Therefore, cryptocurrencies have very little chance to disappear in thin air this decade.