The great cryptocurrency crash of 2022 has been one of the most severe in its history.
In just six months, the market has shrunk from over $3 trillion to just above $1 trillion. Bitcoin lost a third of its value in one week, while altcoins such as Cardano and Ethereum also suffered huge dips. One coin, Luna, dropped 78% of its value prompting its creators to talk about launching a new coin completely.
Among all this bad news, it’s difficult to imagine crypto getting back to its heady levels of 2021, but there are some causes for optimism.
Read on to find out four reasons why some experts believe a comeback is in the cards.
Its history is full of rises and falls
A quick glance at Bitcoin’s price history tells us that peaks and troughs are part and parcel of crypto’s nature.
On the eve of the pandemic outbreak in March 2020, Bitcoin’s price was $4,634, less than a quarter of what it is now. Over the next 18 months it ballooned to $60,000. Between winter 2018 and summer 2019 it also tripled in value.
These peaks have always been followed by huge drops that observers have labelled as ‘the end of crypto’, or a ‘crypto winter’, only for the sector to survive every time. Summer is also a seasonally bad time, with Bitcoin losing 40% of its value in both 2020 and 2021, in between the biggest bull runs in its history.
This time could be different, of course. There’s a smaller pool of new investors to propel the next surge, for example. Yet, there’s a feeling among some experts that many investors are simply biding their time before jumping back in and helping to drive prices up again.
It’s easier than ever to invest
One of the main driving forces behind crypto booms is the rush of investors to grab digital currencies as prices start to climb. In the past, tricky sign-up processes to crypto platforms were a bugbear for users, but most barriers have now been removed.
This means that the next time prices start to show signs of life, the boom could be quicker and stronger than ever as millions of people invest their money in just a few clicks.
Some platforms are even giving out free crypto in a bid to boost flagging investment. Coin Market Cap, for example, has a ‘learn-and-earn’ promotion where users earn tokens in exchange for correctly answering quiz questions in a move designed also to improve crypto knowledge.
While this isn’t exactly like a no deposit casino bonus that you might get just for signing up to a gambling site, it’s still a way of earning something for very little, and could help to reignite interest when a recovery is in sight.
Consider, too, all the banking apps which now offer crypto investments as part of their range of services. Revolut, for example, allows users to invest as little as $1 directly through its app. Ready-to-use services like these make crypto more accessible than ever.
There’s still a demand for it
The last crypto bull run was marked by mainstream institutions that invested billions of dollars into major coins.
JP Morgan Chase is a prime example. The US bank allowed its financial advisors to enroll private clients into six major crypto funds in 2021, and in May its bank strategists stated their belief that Bitcoin would hit the $38,000 price mark soon, up from its current value of around $20,000.
Venture capital giant Andreessen Horowitz also doubled down on its crypto commitments amidst of the downturn by raising $4.5 billion for its fourth crypto fund, taking its total investment to $7.6 billion.
Huge investors like these are normally super cautious when it comes to such largescale moves, which indicates that they believe crypto time isn’t over.
Hedge fund managers back Bitcoin up
Mainstream investors like JPMC are backed up by other financial experts who remain extremely bullish over crypto’s long-term prospects.
Kiana Danial, founder of Invest Diva, stated that she believes Bitcoin is going experience short-term volatility but long-term growth, and she has support from a group of Price Waterhouse Cooper (PWC) hedge fund managers. In a crypto report published in late June, almost half of them predicted that BTC could hit the $100,000 mark by the end of 2022, with a further 35% saying it will reach at least $50,000.
If either of these predictions come true, then it will not only mark a major crypto comeback but also suggest that cyber currencies are here to stay.
Still a very risky investment
Despite these nuggets of good news for crypto enthusiasts, it’s important to maintain a balanced perspective when it comes to such a risky investment.
As mentioned, the hugely volatile nature of Bitcoin and the smaller altcoins make short-term trading particularly hazardous, as has been shown through the billions lost by ordinary investors.
Also, the fact that major political institutions such as the E.U. are taking steps to regulate the industry means that crypto investment might look completely different from now in just a few months.
As such, we can’t rule out the possibility of the golden years of cryptocurrencies being over. Anyone investing in the coins should be sure that it’s with money they can afford to lose if things do go wrong.
With the history of cryptocurrencies resembling a chaotic rollercoaster ride, who knows what could happen next!