Cryptocurrency investors are on the verge of the worst

Cryptocurrency investors are on the verge of the worst

The cryptocurrency market is taking a step into the “cold winter” when it has been consistently falling for the past period.

According to Bloomberg, a bear market (refers to a downtrend period) isn’t necessarily the worst thing that’s going to happen to crypto investors in the near future.

Back in late 2017 and early 2018, Bitcoin price suddenly fell 80% from the high to the low of around $3,100/Copper. The collapse in token issuance and banks’ apathy towards cryptocurrencies were also factors that roiled the market.

Trading volume is consistently low and the gloom signals the return of a “crypto winter.” Bitcoin only started making new highs in December 2020.

The bad memories of 2018 raise concerns about the current state of the market. Since the near peak $69,000/dong, Bitcoin’s value has now evaporated more than 50% and is trading around $34,000/Copper.

Also, the total market cap has also decreased by more 1,000 yen billion dollars. Bloomberg believes this is the “price to pay” if investors continue to believe the Federal Reserve (Fed) will introduce measures to encourage risky assets.

The Fed’s recent moves have impacted every corner of cryptocurrency, from bitcoin to memecoins to exchanges. According to analysts from UBS, the cryptocurrency market will suffer for many more months.

“The 2018 event is the best way to describe the concept of ‘crypto winter’. This is a difficult and potentially long time. Unlike normal winters, it lasted all year,” said James Malcolm, head of forex research at UBS.

The terms “crypto winter” or “crypto ice age” started flooding social media. According to Antoni Trenchev, co-founder and managing partner at Nexo, Bitcoin is already halfway to defining a crypto winter with its recent sharp drop.

“I don’t want to go back to last winter. But undeniably, regulatory and macroeconomic difficulties could push bitcoin price to 28,000 –$30,000/dong,” Trenchev commented.

However, unlike 3 years ago, the cryptocurrency sector is receiving huge investment inflows. Just this month, the FTX exchange announced a venture fund value 2 billion dollars for the Web3 array. The Financial Times also reported that Andreessen Horowitz raises 4.5 billion dollars for crypto funds.

Besides venture capital, companies like Walmart and GameStop are also trying to diversify into the crypto ecosystem like tokens and NFTs.

For Budd White, head of a company that develops blockchain-based software, market dynamics show that cryptocurrencies are in a period of re-evaluation, not freezing.

Despite this, the cryptocurrency market still faces many risks as the Fed considers issuing digital dollars (a form of CBDC). In addition, the US Congress and foreign governments oversee the energy consumption of cryptocurrency mining.

“The White House may soon address the national security challenges posed by cryptocurrencies. The Fed’s report on central bank CBDCs also doesn’t answer questions about similarity to a stablecoin,” said Oanda analyst Edward Moya.

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