TL;DR, from a long-term perspective, no, the crypto market is not dead.
Short-term, we are in REKTastan until we are not.
Are we going through a crypto winter?
Yes, we are.
Has this happened before?
Yes, in the last cycle from late 2017 to 2019, the price of all crypto crashed.
At one point price of Bitcoin was trading between $3,500 – 3,700
Many investors and speculators lost significant amounts of money during this time.
So, what led to the crypto collapse this time around (in 2022)?
Several factors may have contributed to the decline in crypto prices.
Starting from early November 2021 through 2022:
- Russian-Ukraine war
- Luna crash
- Key players in the crypto industry filed for bankruptcy (the likes of 3AC)
- The total meltdown of the stock market
- Sam Bankman Fried and the FTX collapse
- Feds attempt to tame inflation by increasing interest rates
- Cryptocurrency exchanges going out of business
So is the crypto really dead this time?
Since Bitcoin’s inception in 2009, people have repeatedly asked themselves – “Is now the time when crypto finally dies?”.
Let’s dive into whether this new privacy-driven Wall Street is finally ending after over a decade of expansion.
On many occasions in history, media outlets called for Bitcoin to have had its brightest days in the past.
You would be forgiven, of course, for believing such thoughts.
The price and interest in crypto have experienced many bear-market cycles.
Where retail investors have experienced huge drawdowns and periods of depression.
This year we’ve seen a drawdown of 73% on Bitcoin, a before trillion-dollar market cap.
In the last few bear cycles, this drawdown has been frequent, with 2018 and 2014’s lows at around 80%.
Google Trends is showing that interest in searches for the term “Bitcoin” is down by about 50%
Again, this had happened times in the past when people were calling for the end of crypto or the death of crypto.
The hype narratives surrounding one of technology’s latest innovations
Actors with large voices around the media always pump the market.
The best example is that of Elon Musk, CEO of Tesla Inc.
Certain currencies, such as his “flagship” coin DOGECOIN,
Often experience positive volatility to 3-4% upon Elon tweeting about sometimes anything.
A cult of followers is manipulating the market based on his public comments and announcements.
When you have over 100 million followers, it isn’t hard to see how pumps like these occur.
On a day-to-day basis, crypto communities are still active and thriving.
The crowd does seem to follow the bright neon lights – in this case, reading “CRYPTO WILL MAKE YOU RICH” in a vibrant fluorescent green.
For those tempted by these lights and promises of financial freedom
This year has seemed like the result of a scam where prices are down 90%, and a global economic recession looms.
If we take this situation at face value, you’d be forgiven for calling for the “final” death of crypto as if nothing could be worse than this.
Sounds like you? Stop. Breathe.
Take a step back and look at it from a relative perspective.
How often has this happened across multiple asset classes, decades, or even centuries?
The cyclical nature of these events is so consistent that, to an observer.
This year would seem completely planned and as it should be before further growth in the coming years.
If we take the averages from previous S&P bear markets, it is predictable that the lows could be in by December 2022 early 2023.
The average decline has been around 37%
We’ve seen only a drawdown of 24%, meaning there is potential for a further slide down before we’ve observed the bottom.
It takes 180 days from the average time between peak and trough, so if you believe in a kind of mean reversion, there’s a decent chance we have some way left…
Or maybe we have bottomed out already…
A way forward, what should you do?
Buy low, and sell high in bear markets by seeking opportunities.
The bear market is a time of maximum opportunity.
What you need to remember when trading or investing in crypto.
Cryptocurrency is a different kind of investment.
Stock market investments it’s about a company’s financial performance, management, and industry conditions.
In cryptocurrency, it’s about the technology and use of the coin or token.
Some examples of strong fundamentals in cryptocurrency include:
- A coin or token with a strong team working on the technology.
- A coin or token that has real use in the world.
- A coin or token with a good following of developers and users.
- A coin or token with a good track record.
- A coin or token with secure and transparent technology.
- Coins with a strong fundamental narrative: AI, NFTs & Community backed projects (that are NOT overleveraged to the tits)
An example of a project with tremendous potential:
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