It seems there’s one question everyone is asking right now, is crypto dead? Well, one thing is certain, a lot of people are taking interest in cryptocurrency/Bitcoin/altcoins right now as a hedge against declining national currency values, globally.
So, it’s safe to say that, crypto isn’t dead, and here’s why.
Is crypto dead? Why people are concerned?
Bitcoin, the first cryptocurrency by market capitalization hit its highest value on the 10th of November 2021 at $69,000 per Bitcoin according to data available on Binance, one of the foremost cryptocurrency exchanges in the space. Since then, it has seemed to be on a downhill, now trading at $19,520+ at the time of writing, losing about $49,500 (-71%) in 327 days. Leading us into what is called the “bear market.”
This is probably the reason why many think crypto is dead and may never rise again. According to Forbes, the average bear market lasts 289 days. However, we’ve seemed to exceed that number by about 40 days. And this seems to be worrisome to many investors.
Is crypto going to recover?
Although it’s difficult to predict events in the crypto market, it’s also important to consider past occurrences as they can be a perfect guide to what’s to happen in the future.
Grayscale Investments, LLC, a leading digital currency investing services company that provides market information, investment exposure, and investment products to the developing digital currency asset class, declared that the bear market officially started on the 13th of June, 2022. In addition, it says the crypto winter could last for another 250 days.
Why is crypto crashing?
There are a lot of factors that determine market prices; be it cryptocurrencies, stocks, or even commodities. These factors include interest rates, inflation, and other macroeconomic factors.
According to this report, macroeconomic factors that may affect the rise and fall of crypto value include, the central bank implementing monetary policies that affect a nation’s total money supply and the government implementing fiscal policies that influence a nation’s aggregate demand. Covid-19 and the asset/stock markets are also huge factors affecting the market.
However, “the drawdowns in 2022 come as the crypto market has been bracing for action from the U.S. government on multiple fronts. As monetary policymakers raise interest to slow inflation, the Biden administration has ordered federal agencies to develop detailed plans for crypto oversight,” according to this report.
Can Bitcoin reach zero?
We can not talk about cryptocurrencies without talking about Bitcoin. And right now, it seems Bitcoin, the foremost cryptocurrency by market capitalization controls the direction of the general market. If it dumps, the whole market dumps with it, and when it pumps, the same happens to the rest of the assets in the cryptocurrency market. So knowing if the king will ever lose its entire value can be a good indicator to knowing whether or not it’s a wise decision to invest in cryptocurrencies at all.
Madeline Hume, a senior research analyst at Morningstar; one of the Americas financial services firms headquartered in Chicago, Illinois, commenting on this, says that “it’s very unlikely the price of Bitcoin — the largest and most popular cryptocurrency — will go to $0 per coin.” She opined that in regards to it, use cases have been established. And that Bitcoin has become a gateway cryptocurrency for a lot of corporations in traditional finance.
Is it good to buy crypto now?
Well, if large corporations are buying into Bitcoin; countries like El Salvador also, recently bought $15 Million worth of Bitcoin ‘really cheap,’ according to its president, Nayib Bukele; and also, Michael Saylor, Micro Strategy’s boss purchased about $6 million in bitcoin between August 2 and September 19 according to a recent SEC filing; you’ll probably think it is a good time to buy crypto also.
However, it’s also good to establish that cryptocurrencies are highly speculative right now and may swing in any direction. However, it can potentially be a lucrative investment if you are thinking long-term. It’s always important to note the first rule of crypto; ‘never to invest more than what you can afford to lose.’
Can crypto get shut down?
Citing Bitcoin as an example, it’s pretty impossible to shut it down as it’s decentralized. However, many world governments have attempted to ban it or at best restrict its citizens from using it. If one is caught in that case, certain punishment may be dealt to the individual. Besides that, it will take a collective agreement of everyone running a bitcoin node or any other cryptocurrency at that to shut down the network. And as things stand, that’s not going to happen, at least, not anytime soon.