There has been a lot of speculation lately about the health and sustainability of Cryptocurrency, with many people believing that the era of popular cryptos Bitcoin, Dogecoin, Ethereum and others is drawing to a close. So is this the end of crypto? The simple answer is no. But it sure has taken a beating.
The concept of cryptocurrency can be challenging for some folks to grasp. Essentially, cryptocurrency is a neutral digital monetary system that is based on blockchain technology, allowing money to flow independent of a central authority like a government or bank.
Many cryptocurrencies hit record highs in November 2021, and it is reported that crypto has lost nearly two-thirds of its total market capitalization since then. Recent historic rate hikes from the US Federal Reserve have also had a major impact on losses.
The crypto market isn’t dead, but it is volatile. One minute, crypto prices are skyrocketing, the next they are crashing. This instability isn’t expected to subside any time soon, leaving once enthusiastic crypto investors now a little skittish to jump in.
The health of cryptocurrency is clearly dependent on many macroeconomic factors. Time.com reported that while Bitcoin reached an all-time high value of $68,000 last fall, it has been declining ever since. The price fell below $20,000 on July 13, 2022, after the release of June’s rising inflation data, amounting to nearly a 70% loss in about eight months.
It is important to note though that those high valuations last fall were bolstered by the sluggish job market, rising inflation, and the pulling back of economic pandemic initiatives. So really, the downward trend was pretty much expected, though perhaps not to the extent we are currently seeing.
While we won’t dive into the ins and outs of crypto investments, the likelihood of the Feds hiking rates again this summer by a full point makes Bitcoin and other cryptocurrencies risky assets for investors, at least in the near future.
Now get this. Even with Bitcoin’s recent value bleed, many crypto experts predict it could still hit $100,000 in 2022. Like all investments, volatility also affords opportunity, so shrewd investors are keeping a close eye on the market.
In the coming years, it is expected that crypto will continue to gain momentum as regulations, legal framework, and taxation systems get hammered out. It is also anticipated that countries will increasingly name crypto as their legal tenders and, in all likeliness, retailers will start accepting payments by digital currency.
Don’t believe the hype. This is not the end of crypto. In fact, it’s just getting started.
Stig Ravdal is the President & Founder of Ravdal, Inc., a leading cybersecurity strategy and solutions company. He is widely considered an expert in the field and is available for speaking engagements.