on the crypto
The $ 2.000 trillion cryptocurrency market crash wiped out investor earnings and wiped out once fundamental cryptocurrencies. For example, the collapse of the Earth (LUNA) is one of the main factors that led to the collapse of the cryptocurrency market. The algorithmic stablecoin lost all its value following the collapse of TerraUSD (UST) in May.
Another important factor is the centralized finance lender Celsius, which offered users returns of over 18% for depositing their cryptocurrencies. The company suspended withdrawals for customers in June.
Market participants are calling the current turbulence the "crypto winter". For starters, crypto winter is the term used when there is a rapid and sustained decline in crypto values. Prices can remain depressed for many months, with drops of up to 50-90%. It was a difficult phase for the cryptocurrency investors, who are eager to know how long this period of discomfort can last and how to survive the freezing cold of the cryptocurrency markets.
The current phase could be challenging for keepers; however, this is not the first time the market has seen such high volatility. Between 2018 and 2020, bitcoin lost nearly half of its market value, but returned stronger in November 2021, reaching all-time highs.
The Fed's latest monetary policy decision on Wednesday had little impact on the bitcoin price. The Federal Reserve, which continues to curb stubborn inflation, raised interest rates by 0,75%, the fourth consecutive increase this year alone.
Immediately following the announcement, experts had broadly predicted that investors should expect new volatility this week. At first, cryptocurrency market sentiment appeared slightly bearish, although prices showed signs of a rally.
Bitcoin was trading above $ 23.000 and Ethereum above $ 1.700 on Thursday, both up more than 10%.
Edward Moya, senior market analyst at Oanda, told Time:
"The FOMC decision has given optimism that the end of the squeeze is in sight, and this has triggered a nice rally for risky assets that has helped to elevate cryptocurrencies."
According to Moya, cryptocurrency investors are keeping an eye on the price of bitcoin, ethereum and other cryptocurrencies to see if there is a "possible retest of the June lows".
However, despite last week's positive momentum, the price is nowhere near the highs it reached last year. When looking at the history of cryptocurrency volatility, it's not clear when the market turmoil will subside.
Some market experts predict the second half of the year could be more painful as cryptocurrency companies struggle to pay their debts and process customer withdrawals.
For example, Tom Loverro, a former member of the Coinbase board of directors, shared his predictions on the cryptocurrency winter in a series of Twitter threads. According to him, the current phase could go down even further in 2022.
He noted that the pandemic has largely driven the 2020 bear market and the current cryptocurrency winter is not similar to the fall of 2020. He further stated that:
Loverro advises investors to have enough liquidity to get through the next 30-36 months. He said that "cryptocurrencies will be back bigger than ever".
In an interview with FX Empire, Dora Yue, founder of cryptocurrency firm OKEx, said that after this "aggressive cycle of forced selling and deleveraging", investors have many reasons to remain optimistic, such as :
The start of the third quarter of 2022 would not be pleasant for bitcoin, given the small steps that cryptocurrencies take to recover. As reported by FXEmpire, bitcoin posted a quarter-to-quarter loss of more than 57%, while ether fell more than 67% over the same period.
According to Nomura, a Japanese financial services giant, major economies could experience a recession "in the next 12 months due to tightening government policies and rising costs." These words have made investors shiver, who expect tough times in the near future.
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