It’s been perhaps the roughest of years for Bitcoin, as the world’s foremost cryptocurrency has lost half of its valuation in a fairly fast market crash. Released in 2009, it’s not since the crypto crash of 2018 that we’ve seen similar sell-offs from investors.
So, just what happened – and where do we go from here? Let’s delve deeper into the intricate world of Bitcoin; it’s highs and lows and ultimately whether or not it will survive this rollercoaster ride of volatility
What Caused Bitcoin To Plummet?
After the high highs of 2021, where crypto was riding a wave of surging popularity, meme-coins and meme-stocks were rocketing in price, and NFTs were everywhere, we’ve now come to an almost-complete turnaround.
The situation has deteriorated so much that crypto exchanges such as Zipmex have paused withdrawals – an occurrence that only happens when it’s likely that fast withdrawals will send an exchange out of business.
So far, there haven’t been that many crypto businesses that have collapsed, although many people have had their personal fortunes disappear before their eyes. Not a fate you’d anticipate when venturing the unknown investment world of crypto. Alas, it’s a possibility that one needs to be ready for – just in case.
But How Did This Happen?
Well, Bitcoin started its downward spiral around the same time as there were real indications that Russia was looking to invade Ukraine and war was imminent back in November 2021. Tech stocks also took a downward march, as the market became more risk-averse.
In fact, if you look closely at stocks versus crypto, you’ll see that they’re actually fairly tightly coupled, with effects amplified in the crypto markets as a ‘riskier’ investment. The publicly listed exchange, Coinbase, has also seen its share price drop from over $350 in November to just $70, reflecting both a crypto and tech stock sentiment change.
Combined with other global conditions, including ongoing supply chain disruptions, the global pandemic and related ongoing issues that are still prevalent – particularly in China – and challenging political and ecological times, it really makes for a perfect storm.
The Canary In The Coal Mine?
While crypto is much further down than stocks, we’re also experiencing a serious downturn in the stock markets, which, paired with rising inflation and interest rates is indicative that a recession may be on the cards.
The crypto downturn may have been the first real indication of this – the canary in the coal mine, so to speak. While it’s yet to be seen whether there will truly be a recession, current conditions seem to indicate this. Has Bitcoin hit rock bottom, or do we have further to go?
The Future Of Bitcoin
Surely this digital currency can pick itself up and get back to where it was? After all, it’s still ranked as the top performing and highest valued cryptocurrency. Not only that, investors and users alike still opt for digital payments in BTC, because of its security, ease of use, and overall convenience.
From transacting a business deal, to depositing or withdrawing funds when playing online slots, it’s still a currency that’s alive and kicking. In fact, CryptoReels has a 450% match bonus that proves this.
While nothing is ever certain, Bitcoin will likely bounce back when confidence has returned to the world in general. If crypto rises are a sign of good times continuing and both people and businesses having money to splash out on, then we’ll live to see another rise.
How long this current phase in financial uncertainty around the world goes on, however, is another question. According to history, US recessions usually last between one and two years. If we’re to hedge bets that we’re about to go into a recession, then BTC may not bounce back for some time to come.
On the other hand, the crash may be a sign that crypto has not proven itself useful nor relevant to the world at large, and that the value was completely overinflated.
Should Altcoins Be Considered?
Although cryptocurrencies might have had a unbridled start reminiscent of a ‘Wild West’ in the investment world – one which is regulated and controlled by dissidents, whether conformists like it or not, it’s now considered as part of the mainstream economy.
So much so, established stakeholders and international banks treat it as an actual asset notwithstanding its current precariousness and controlling restrictions in countries such as China, amongst other jurisdictions.
To illustrate its high volatility, we need not go too far back in time. As of August 2, Bitcoin’s value has ranged from a low of $17,708.62 to an all-time high of $68,789.63 in a mere year! How’s that for massive highs and lows? And yes, even though there’s such manifest unpredictability, many crypto investors are keeping their eyes peeled for the next Bitcoin.
Prior to narrowing down which cryptocurrency might be the next ‘hit’, it might be more practical and mindful to understand the reason why so many stakeholders are gravitating towards cryptocurrency to begin with.
One of the fundamental driving forces has to do with a central shift in how digital assets are perceived. This in turn may quite possibly open the door for other cryptos to gain pole position in the race of popularity.
For instance Ethereum (also referred to as ether, for short) is gaining popularity and usage at a pretty fast rate, albeit still not surpassing BTC’s value.
Sell Or HODL (Hold On for Dear Life)?
At this stage, if you own crypto, you’re probably kicking yourself that you didn’t cash out earlier. Either that, or you’re a main stayer, and have no interest in divesting yourself of crypto assets yet. If you have been wise in your investments and not put in more cash than you can afford to lose, then the market downturn will simply be an annoyance rather than a personal finance horror-show.
After all, market speculation is always a gamble. So, to sell or to HODL? Well, that all depends on your strategy, your financial situation, and your predictions for the future. There’s no shame in cashing out for less than you put in if you have lost overall confidence or you need the funds.
On the other hand, if you believe that crypto is only experiencing a downturn due to extenuating circumstances and you don’t mind sitting out winter in a bear market, well, then it’s okay to HODL.
With over $2T wiped off the crypto markets – or two-thirds of the entire market cap – it’s scary times for BTC enthusiasts, but we’ll watch and wait to see what’s next.
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