Despite being a brutal year for cryptocurrencies such as Bitcoin and others, the digital assets seem poised to make a big comeback. Read on to learn why.
Undoubtedly, 2022 has been quite an unforgiving year for crypto investors in cryptocurrencies like Bitcoin, Ethereum, and many others. This year, Bitcoin's value more than halved and is currently hovering at the $23,000 mark; a single coin is now priced at above 65 per cent below its all-time peak of almost $70,000 last year. Furthermore, the price of all cryptocurrencies as of late has plunged to a little more than $1 trillion, a significant drop from $2.2 trillion by the tail end of last year.
Being the biggest cryptocurrency at present, Bitcoin makes up around 42 per cent of the market total, but this year has been equally just as bad for holders of other cryptocurrency-related assets like Coinbase, wherein its stock tumbled by 75 per cent so far in 2022.
Despite this, many hope the worst may be over for crypto. Bitcoin saw an increase of more than 15 per cent lately, and a couple of other top cryptocurrencies rose even higher. Solana climbed up 35 per cent in July 2022 and is hovering at around $39.50 at the time of writing, while Ethereum experienced a near 45 per cent increase during the same period and rising this August.
To expect more volatility in the crypto market
The cryptocurrency comeback may seem like validation for crypto's biggest supporters, but it, more importantly, should remind everyone that this growing market will likely stay volatile in the near foreseeable future.
Market strategist Joel Kruger points out that Bitcoin's upturn has inhibited the upward spikes in Ethereum and other cryptocurrencies, which remains concerning for the near future. A broad range of digital stocks and cryptocurrencies may not see any substantial recovery until Bitcoin experiences a healthier bounce.
The price behaviour of Bitcoin is akin to volatile tech stocks rather than more established and stable commodities like currencies backed by official governments or gold. In addition, investors should heavily consider that general interest in cryptocurrencies may just not suffice to justify the numerous tokens, coins, and crypto exchanges in Singapore today. If that is the case, then only the most popular and strongest cryptocurrencies will survive.
Crypto has experienced a run similar to that of the dot-com era wherein many great companies and ideas came about, but numerous middling ones also followed in step. The same may apply to cryptocurrencies. Amid more demanding markets, organisations with a weaker business model and in a more vulnerable position will feel the pressure.
Some will win, some will lose
Furthermore, it seems that the turmoil in the crypto sector has determined the winners and losers among startups and publicly-traded businesses. Celsius, a prominent crypto lender, filed for bankruptcy in July 2022. Meanwhile, FTX, one of the many crypto giants today, is now valued at $32 billion and still thrives. They also recently got into agreements with BlockFi, a struggling crypto company, to provide them with credit. Moreover, Sam Bankman-Fried, CEO of FTX, spoke about his company's financial power to help out other struggling crypto firms.
Has the price of cryptos such as Ethereum, Bitcoin, and other popular crypto stocks finally peaked? There are some positive indicators – as mentioned, the strongest proponents of the industry may see validation in the comeback of cryptocurrency. Simultaneously, it still serves as a reminder that the developing market will probably continue to be unpredictable for some time to come.
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