Crypto Winter 2022 : In the past few weeks, cryptocurrency market has plummeted, with several prominent crypto prices hitting new lows in 2022. During the current slump, the price of one of the most popular cryptos (Luna) has dropped to virtually nothing. Despite the enormous drop, this is most likely not the worst situation the entire crypto community has ever faced.
Multiple bear markets have occurred during our company’s 9-year history. We’re not certain if the current dip is a sign of a bear market just yet. Every previous bear market has seen a comeback in 2-3 years, and I see no reason why this time will be any different. The crash hasn’t been on the same scale as the one that occurred in 2019.
These cyclical dips in the value of cryptocurrency might seem to be pointless, but they aren’t. Whether the price goes up or down is not a key part of this crypto thing — what counts is buying into the belief that cryptocurrency prices are only going in one direction: Up!
In 2015, the total value of all cryptocurrencies was less than $10 billion. By the end of 2017, that number had grown to nearly $600 billion. Today, it’s approaching $800 billion again.
Although these statistics are interesting, they don’t tell you much about the current state of the cryptocurrency market. The truth is that it’s difficult to predict what will happen next in this evolving industry
What we’re seeing right now is that none of the “industry-leading” crypto projects have proven themselves to offer their participants a high enough level of any fundamental value or real-world utility and haven’t been based on sound economic models that can necessarily stand the test of time.
Crypto Winter: What does this mean in Short term?
In the cryptocurrency community, the consensus is that everything thrives during a bull run, but during a bear market only projects that are truly building something with underlying substance will thrive. Rupture continues, With the recent contraction of the market, the speculative bubble of meme tokens and NFTs is coming to a close.
We’re absolutely in a bear market for the short term. Previous bear markets have seen crypto correct nearly 80-90% of the all-time highs created in the bull market, so it would not be surprising to see Bitcoin test $20,000 and perhaps even break it.
We may very well be seeing the bubble burst for projects and models that have been built because of short-term thinking rather than piece by piece with the goal of establishing something long term and sustainable that offers use cases and utility for the real-world.
We have seen this in 2013, 2017, and 2021, and I don’t see why we wouldn’t see it in 2024-2025. Every four years, the mining reward of Bitcoin cuts in half per block, and this simple reduction in supply has always brought lots of demand.
Regulation and compliance will get more attention and there will be the ever growing need for compliant payment infrastructure platforms bridging fiat and cryptocurrencies. This will empower businesses and their users to buy and sell crypto easily and securely with fiat money without leaving their sites.
Short-term means that investors are panic selling, big companies like those owning CEXes are laying off employees and having liquidity issues which are making investors take their money out of such exchanges even more, funds are close to margin calls, poor quality coins are definitely dead and average ones are really facing huge challenges (see TRX) which may result in other scams like the one that Do Kwon did with UST, investors are turning to other assets or even just converting everything into Fiat (inflation is so high that paying for expenses may be a problem now)
Crypto Winter 2022 : Is this the end of crypto market?
This is not the first crypto winter we are experiencing. If anything, this is very different from 2018, given crypto adoption is much higher.
What we’re seeing right now is that none of the “industry leading” crypto projects have proven themselves to offer their participants a high enough level of any fundamental value or real-world utility, and also haven’t been based on sound economic models that can necessarily stand the test of time.
Instead, the industry has been largely built on hype and speculation which encourages high-risk practices. This is now having a damaging impact on the majority which is primarily retail traders and individuals.
Will the crypto recover again?
This is perhaps one of the most frequently asked questions among cryptocurrency users these days. As quickly as the world recovers from the worldwide economic disaster, cryptocurrencies may expect a recovery. A strike like this will undoubtedly upset market emotions. It only comes back to life when the badly constructed mechanisms are removed.
Although the cryptocurrency landscape looks defeated today, experts are looking to Bitcoin’s next halving event, which will take place in 2024. This, coupled with far greater levels of institutional acceptance among the world’s leading financial institutions, like Visa and PayPal, suggest that crypto won’t be set to disappear any time soon – although a state of hibernation over the short-to-mid-term may be likely.