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Is Crypto Dead?

is crypto dead?

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. 

Crypto Winter 2018
The price of Bitcoin in 2018 varied greatly. It began the year around $13,000, then dropped to around $6,000 by mid-year, before falling further to around $3,000 by December.

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:

  1. Russian-Ukraine war
  2. Luna crash
  3. Key players in the crypto industry filed for bankruptcy (the likes of 3AC)
  4. The total meltdown of the stock market
  5. Sam Bankman Fried and the FTX collapse
  6. Feds attempt to tame inflation by increasing interest rates
  7. 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. 

Wallstreet Cheat Sheet: Psychology of a Market Cycle
The market psychology cycle is a pattern of emotions & behavior in investors during different phases of a market trend; Optimism, Excitement, Greed, Fear, Desperation, Capitulation, Hope.

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%

Google Trends is a tool that lets you see how often a term, such as "bitcoin" is searched for over time. Use it to track popularity, compare to other terms and see how it relates to markets and events.

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. 

elon musk pumping dogecoin with lion king post in 2021
Elon Musk pumping dogecoin with Lion King post on Twitter back in 2021

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…

Bull, Bear & Recessions cycle

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. 

You make most of your money in a bear market, you just don’t realize it at the time.

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: is a decentralized AI, ML and blockchain platform for creating smart marketplaces and other dApps.
Bitcoin and Ethereum are two examples of the largest cryptocurrency with strong fundamentals.
Bitcoin is a crypto asset that works without a central bank or a single administrator.
It can be sent from person to person through the internet without needing a middleman.
Ethereum is a platform and operating system that uses blockchain technology.
It allows developers to build and run decentralized applications.
Both the assets are here to stay. Period. 
The death of crypto and Bitcoin remains a perpetual question that will likely never get a definitive answer due to the nature of cycles and the human emotions that play their part in them
The value of crypto digital assets can be volatile & high risk.
With prices fluctuating over short periods of time.
None of this is intended to be financial advice.
It’s important for anyone considering crypto trading to research the options available and understand the potential risks and rewards.

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