Will the Cryptocurrency Market Rise Again?
The Great Crypto Crash! The Cryptocurrency is Plunging!
Bitcoins slumps to below 20 thousand dollars!
Will The cryptocurrency market recover?
The cryptocurrency market has been in a recession since late 2021. However, there is still much confusion around the “what” and the “why,” how the crypto crash happened, and to what extent.
Moreover, the biggest question in everyone’s mind is whether the cryptocurrency market will recover.
We will address this in this article, so make sure you stick around until the end to find out.
What is up with the crypto market these days?
It has been all over the news. You would have doubtlessly heard it even if you are not a huge crypto fan.
It is facing a downturn of historical levels that equally affects almost every token in the market. It is ironic considering how the cryptocurrency market was heralded as a great way to make profits a few months ago.
However, this does not mean that the market will stay bearish forever.
This is just a temporary hurdle.
Let me give you a quick example to put things into perspective. Bitcoin, the obvious leader in the market, was priced at more than $60,000 per token last November.
Currently, it is trading at around $20,000, 3 times less than its peak. Imagine the condition of other tokens if the market giant trades in this condition. Billions of dollars are being wiped from the cryptocurrency market every week.
In November, the global crypto market cap was around $3 trillion.
It is worth around $900 billion now.
With just a few oddities, virtually all crypto assets have lost more than 90% of their value from record highs. According to data from crypto price aggregator CoinGoLive, 98.5% of the 13,436 cryptocurrencies are valued at less than 10% of their peaks.
Out of the 196 coins that drifted above a 90% decline, 19 are stablecoins, which means that the exact percentage is slightly higher. Stablecoins are tokens pegged to the value of other currencies; hence, their fluctuation is not caused by the crypto market recession.
The best performing heavy capped coins, measured by pullback size from record price, are Binance, Bitcoin, FTX, TRON, and Ethereum. These have drawdowns in the range of 68 to 78%.
Bitcoin has also fallen to its lowest levels since 2021.
Interestingly, Bitcoin’s market power has historically declined in the bull market, increased significantly in the bear market, and is now 42.9%. Meanwhile, Ethereum’s market advantage declined from approximately 18.5% to 14.9% over the same period.
A closer look at the data reveals another surprising fact.
In short, 95.5% of all cryptocurrencies on the market are down more than 99.9% from record highs.
For most of this class of cryptocurrencies, this reduction in scale effectively means that their prices have dropped to virtually zero.
You might remember when LUNA made headlines for its crash.
KSI, one of the most successful YouTubers on the platform, had invested $2.8 million in the token, which fell in value to $1,000, a decline of 99.96%.
KSI had a massive meltdown about his losses, justifiably.
Imagine the impact it would have had on other average traders if it caused a rich YouTuber to break down. Many believe the Luna-Terra crash was the start of the crypto slowdown, which wiped nearly $40 billion in one go.
Ironically, stablecoin is the only asset class whose market capitalization has not dropped significantly. Despite Terra’s $ 18.6 billion explosions along with Luna, Stablecoin currently has a market capitalization of approximately $ 157.8 billion.
It is not vastly smaller than its record size and is still about $ 24 billion larger than the size of ETH, the largest smart contract platform on the market. Besides stablecoin, almost every other class of tokens has bled investors dry.
Do you HODL any stablecoin? Let us know which ones you HODL in the comments below.
So you might wonder, what is propelling such a historical market crash?
The crypto market is connected to the stock market.
If there is a downtrend in the stock market, the same is true in crypto.
Many general macroeconomic factors that affect the stock market lead to a subsequent effect on the crypto market.
From late 2021 to mid-2022, cryptocurrency prices fluctuated in line with stock prices, according to Investopedia data. The same is true, with tech stocks such as Amazon, Tesla, and Apple all dropping more than 6% on the S&P 500 chart. That’s a big deal in the stock market.
A similar pattern was seen in the crypto market.
Bitcoin, Musk-backed Dogecoin, and ETH all fell sharply. According to a New York Times report, Bitcoin price volatility closely reflects Nasdaq’s price volatility, a benchmark for tech stocks.
The ideal cryptocurrency market should develop independently of traditional markets but is sensitive to mainstream financial movements.
Another reason prompting the crypto crash is the sudden hike in interest rates. The Federal Reserve Board had decided to raise interest rates to cool inflation.
The Wall Street Journal report suggests that the Fed will pursue aggressive strategies to raise debt prices, curb spending and restrain record-high inflation.
Aggressive interest rates are generally seen as a significant indicator of recession.
After the news, both the stock and crypto markets experienced a significant decline.
Investors lost confidence, started selling digital assets, and shed blood on the crypto market.
Celsius Network, a decentralized financial company, announced that it will freeze all crypto transactions because of extreme market conditions.
After the shutdown, all the tokens crashed due to a sudden dip in liquidity.
We are taking these necessary steps to stabilize liquidity and operations while taking steps to protect and protect our assets, the company said in a blog post. In addition, you will continue to earn rewards during the break, in line with your commitment to Celsius.
As of May 17, the company processed $ 8.2 billion worth of loans and had $ 11.8 billion in assets,
according to the website. It has more than $ 20 billion in assets last August.
In 2022, investors are riding a crypto roller coaster.
The crypto market fell in January but rose again in February and crashed a month later.
The global crypto market is under scrutiny as the World Government seeks to regulate crypto.
Many countries are laying down compliance requirements, which will reduce liquidity in the market. Moreover, the onset of the ISO 200022 standards also had an impact, as only a very few coins were fully compliant with the standards when it was announced.
So what is in for the crypto market in the future? Will it recover, or is it doomed forever from here on?
With inflation at its highest level in 41 years and the impending monetary tightening by the world’s central banks, some enthusiasts say risky assets such as stocks and cryptocurrencies could further increase losses.
The US Federal Reserve is likely to raise interest rates further as well.
With the global crypto market declining 70% from its peak, further losses could mean that a more significant percentage of coins will be virtually zero.
However, many other experts are still bullish and optimistic about the future of crypto. Alexander
Vasiliev, the co-founder of the global payment network Mercurio, said in an Independent article:
“This will be a record high of $ 70,000 [£ 49,553.35] in the medium to long term. Daniel, the founder of Invest Diva and the author of Cryptocurrency Investing For Dummies, said: What we expect from Bitcoin are short-term volatility and long-term growth.Big Four Accounting Firm PriceWaterhouseCoopers released its fourth Global Cryptographic Hedge Fund Report. As per the report, the bottom line on crypto was The overall crypto market was pretty bearish, but the manager remained very bullish on BTC.”
The president of Tezos India said the crypto crash was not as large as in 2019.
He says cryptocurrencies can be expected to recover if the world recovers from the global economic crisis. Such a hit will definitely disrupt market sentiment, but it will only come back if a poorly constructed system is eliminated.
Moreover, some coins are already reaching vital support levels, after which they have no choice but to rebound.
This is becoming more evident with Cardano and Solana, which dropped by 28% in just one week.
They are now predicted to take a bullish path as buying pressure increases.
If the same trend reflects on other coins even to a small extent, the market has the potential for a gradual recovery.
Do you think the crypto market will revive itself?
What coins are you looking forward to investing in?
Let us know in the comments down below.
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