According to Coinbase, between October 12, 2021, and October 12, 2022, the price of Bitcoin decreased by around 67%. Its current value of $19,587.35 as of October 17 is almost 70% less than its all-time high of $64,912.20 per coin in November 2021. Similarly, Ethereum is down over 64% since this time last year, and it has lost almost 72% of its value since its all-time high. According to Coin Market Cap, the worldwide cryptocurrency market has decreased by around 60% in the previous year, from $2.3 trillion to $900 billion. Moreover, the price of Bitcoin tends to influence the price of other cryptocurrencies.
Since June 2022, the cryptocurrency market cap has been relatively stable, fluctuating between $800 billion and $1.2 trillion. The 50% increase from $800 billion to $1.2 trillion between June and August 2022 may seem to be a substantial movement, but the cryptocurrency market is inherently unpredictable, and such a swing is far less than prior bull runs. Since August, the cryptocurrency market has fluctuated downward, reaching a current worth of around $900 billion.
What Sets Cryptocurrency Apart from Other Investments?
In contrast to stocks, ETFs, and even U.S. savings bonds, cryptocurrency is a highly speculative investment without a historical history of volatility. Certainly, crypto has before undergone crashes. According to Forbes Advisor, the last crypto winter happened between January 2018 and December 2020. Since 2011, the cryptocurrency market has witnessed huge declines, although this pales in compared to the stock market’s lengthy history of losses and gains.
Although crypto is gaining in popularity, with a rising number of businesses using it as a method of payment, nobody knows whether the currencies of today will still exist decades from now.
However, if you are ready to retain for the long term, staying with the more renowned cryptocurrencies, such as bitcoin, may give you some stability and security. As is the case with all investments, you should never invest more than you can afford to lose. Even more so in the case of cryptocurrencies, which are seen as unpredictable investments with an unknown track records.
However, if you have the capital to invest and are ready to take a risk for large returns, purchasing cryptocurrency in a bear market — particularly respected currencies such as bitcoin and Ethereum — might offer a wonderful bargain.
Former independent financial adviser and founder of the Digital Assets Council of Financial Professionals Ric Edelman previously told GO Banking Rates that “for long-term investors, price decreases create a purchasing opportunity.”
Everything depends on the crucial issue of whether the cryptocurrency market is rebounding.
Will Cryptocurrency Revive in 2022?
For the bitcoin market, the immediate future may not be favorable. Bitcoin and other cryptocurrencies continue their downward trajectory, but at a somewhat slower pace than in the first few months of 2022. According to an investigation by the International Monetary Fund, the cryptocurrency market swings more in tandem with the stock market than it did in the past. With analysts forecasting an impending recession, this might imply bad news for the cryptocurrency markets in the near term.
However, things may not be that dire in the long run. In the past, “blue chip” cryptocurrencies, like bitcoin, have rebounded from massive collapses and continued to expand dramatically. If investors feel a certain cryptocurrency has the potential for long-term development, they may invest now or in the near future, while prices are low.
Can Cryptocurrency Survive a Crash?
The cryptocurrency market has already rebounded, and if the stock market serves as a precedent, it is likely to do so again. The Guardian attributed the drop in cryptocurrency valuations, driven by Bitcoin, to the demise of the Terra coin. Terra intended to function as a stablecoin. In other words, its value was pegged to that of the U.S. dollar. In one week, though, Terra’s value plummeted from more than $50 billion to nearly nothing. As a result of this occurrence, additional stablecoins began to lose value, followed by bitcoin.
While the bankruptcy of Terra may have been a trigger for the crypto market fall, other economic issues, such as inflation and increasing interest rates, also had a role. “When inflation rises, bitcoin falls, and as economic prospects fade, so does the possibility for a digital revolution,” as reported by The Guardian.
However, the success of cryptocurrencies depends on the technology that underpins them: blockchain. With the expansion of the metaverse, NFTs, and even NFT-based games, the technology behind cryptocurrencies seems more widespread and promising than ever before.
Edelman said in a previous interview with GO Banking Rates, “The basic characteristics of blockchain technology offer enormous advancements for commerce: organizations employing the technology will be able to operate quicker, cheaper, and with better security, transparency, and inclusivity. Just as the bursting of the Dot-Com Bubble did not result in the death of the internet, neither will today’s crypto winter result at the end of Internet 3.0.”
Will the Cryptocurrency Market Ever Recover?
Will cryptocurrencies ever return to their 2021 record highs, when the price of a single bitcoin hit $64,000? Some analysts predict that not only will cryptocurrencies recover, but bitcoin may approach $100,000.
Can Cryptocurrency Rebound?
As the current crypto winter winds down, many currencies will certainly cease to exist. Numerous penny cryptocurrencies, for instance, which are extremely speculative and volatile investments, may fall irreversibly. However, “blue-chip” cryptocurrencies, such as bitcoin, are more likely to withstand the storm.
The top 500 coins by market capitalization are more likely to provide positive returns over time, regardless of price. And these are reasons of failing of the cryptocurrency and we are dependent on these 500 coins to survive and boom again in the market.