EXCLUSIVE: After Its Crash, Here’s 3 Key Predictions On Where The Crypto Market Goes Next?
Ups and downs, peaks and troughs, they’re signs of a typical market. Many people would not have been feeling happy and healthy amid the crash in the cryptocurrency traders recently experienced, and are still experiencing, as Bitcoin and altcoins plunged amid a bear market. Antony Portno, Managing Director at Traders of Crypto, shares his thoughts on the causes of the crypto crash and what it means for the future of cryptocurrency around the world.
*It is important to note that this is not financial advice, but merely a commentary on the state of crypto from Antony Portno*
Bitcoin has fallen to its lowest point in about 18 months, with records of its value trading at just above $21,000. The global cryptocurrency market cap has shrunk by more than $1 trillion since 2021. Most notably, Bitcoin has fallen to its lowest point in about 18 months, with records of its value trading at just above $21,000, whilst other altcoins also suffer in the sharp price drop.
Due to the fragmented and unregulated nature of the cryptocurrency market, it is hard to tell with certainty why it is crashing and even harder to make a prognosis on the direction of cryptocurrencies in the near future (because if it was easy, I wouldn’t be writing this right now!) Nonetheless, Portno shares some factors one should take into consideration:
- “After Friday’s news that inflation in the U.S. had reached a 40-year high, the Federal Reserve has hiked its benchmark interest rate by 0.75 percentage point, the most aggressive increase since 1994. The Federal Reserve’s actions to increase interest rates and tighten monetary policy are intended to slow down the U.S. economy. The big risk is that the Federal Reserve over does it, and as a result, the U.S. economy slows down too much, and the U.S. enters a recession. In that scenario, risky assets could have a further fall.”
This seems like a worldwide trend, given how in the UK too, inflationary pressures and the sharp rise in the cost of living is encouraging more and more people to be wary of their disposable income. Conversely, one may argue that this is the exact reason why people should diversify their assets and look to alternative forms of revenue. But those who make these observations are most likely the people who have already established a comfortable security blanket and can afford to do so, as opposed to those who are genuinely living the struggle.
- “As noted above, cryptocurrencies have a tendency to correlate with stocks and other risk assets. While the stocks are officially in a bear market, we are likely going to see crypto prices plunge further. Looking at the historic bitcoin position in bear markets, its current drop is around 80% from its last record high, which would imply that there is still potential for further fall. On the other hand, it is important to note that bitcoin specifically appears to be in the oversold zone, which essentially means that there is potential for it to still rebound.”
On a similar notion, although in the short term, such a plummet in value may have a negative impact, the crash will help those currencies that survive to become even stronger, as well as providing an opportunity for first time investors to get a slice of the action for a fraction of previous prices.
- Coinbase, one of the biggest market players, is expecting a crypto winter as it has announced plans to lay off 18% of its workers.
This is an interesting observation. So often we hear commentary on the consumers within the crypto market, as opposed to the actual workers in the industry! With nearly a fifth of one of the world’s largest crypto exchanges losing their jobs, is this just signs of an increasingly automated and technological world, or does it represent a more pessimistic stance for the industry? Personally, I’d chime in and say it represents both.
Are you still intending to get involved in the cryptocurrency market, despite the losses people are experiencing? Or is it time for you to cut your losses and explore other investment opportunities? Let us know!
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