Can’t cryptocurrencies hit bottom and rise again? |


The last few days may be the hardest for cryptocurrencies in recent years. Overall, equities have fallen, the bond market has slumped to a nearly 9-year low, and risks have risen. All of this has a lot to do with the pandemic caused by covid-19 at the beginning of 2020 and the fact that the global economy has yet to recover from such a severe blow.

To this we must add the last war, which was a turning point not only in world history, but also, as always, in the economy. The war between Russia and Ukraine has created different movements in the cryptocurrency market since its inception. From then on, major cryptocurrencies started to fall a few points below the normal average, and what some see as the beginning of the end for cryptocurrencies began to take shape.

The uncertainty created by the economic situation in the world caused investors to make important decisions, one of which was to reduce their investments in risky assets such as cryptocurrencies. This means that the speculative, bullish enthusiasm that has characterized bitcoin and other cryptocurrencies, at least until the mid-to-late 2020s, has almost completely disappeared.

And if such a decline was predictable, it took many people by surprise. A few months ago, the speculative frenzy in the cryptocurrency market was at its peak, only on November 10, bitcoin reached an all-time high after a massive drop following China’s mining and mining ban.

Towards the end of last year, there were some signs that 2022 could be a good year for cryptocurrencies, but others thought it unlikely. Several analysts claimed that a major downturn awaited the market, and at the beginning of the year, the decline in the prices of major cryptocurrencies began to be felt, and while there was a certain stability at times, this has changed drastically. and previous peaks are increasingly distant.

Cryptocurrencies are not immune to inflation

Although cryptocurrencies seem to be quite far from the traditional economic structure and way of functioning, sometimes some similarities and the fact that cryptocurrencies do not escape inflation attract our attention. While sometimes this is beneficial for cryptocurrencies, there comes a time when the trend can reverse and affect the market.

The market is currently in a very difficult environment, with wars, general inflation, recessions, and regulatory oversight creating the perfect mix for the overall decline in the market’s value. In just a few hours, very sharp declines were recorded, resulting in significant losses for many investors.

And while many market participants expected rising inflation to work in favor of cryptocurrencies, the situation turned out to be different. In the case of the United States, the world’s largest cryptocurrency market in terms of transactions, participation and mining, it has experienced record inflation, not seen in over 40 years.

In the first quarter of this year, US GDP fell 1.4%, leaving the country’s most important investment destination in one of the most turbulent times for its economy. That’s why we’re recording sudden changes at the level of cryptocurrencies, and if we add to that what happened with Luna and Terra, it becomes the most dangerous and safest combination for a failure, at least and in the short term.

And as always, there is always hope for growth in the market, but what will happen is uncertain. No one can predict bitcoin’s fall or rise at any given time, it remains to wait and see how investors will react during the crisis.

Some analysts believe that the market will experience much more difficult days, but will start to rise again by the end of the year. At the moment, we are not talking about the next peaks because it is a remote possibility, but the possibility of recovery is not excluded and at best, if good gestures are made, the market will see good days again.


Source link

Leave a Comment

Your email address will not be published.