What Is Happening with the Crypto Market?

What Is Happening With The Crypto Market?

Recent events have understandably shaken many people’s faith — and interest — in crypto. Although cryptocurrencies collapse all the time, UST is a stablecoin. And if an asset that was quite literally designed to be a stable and reliable store of value can crash this hard, what’s to say about other coins and tokens?

Well, cryptocurrencies have always been and will likely remain for a while high-risk, high-reward assets. Perhaps we, as crypto lovers and investors, needed this wake-up call to remind us that the industry hasn’t turned into something it isn’t — at least, not yet. 

Crypto isn’t some magical solution to the world’s problems. It isn’t a magical button that can multiply anyone’s funds or a store of value that can weather any storm. At the end of the day, it is just an asset class — and should be treated as such. 

The crypto market has been going through a rough patch lately. But is it a sign of impending doom or just a regular good ol’ bear market? Let’s try to figure it out.

Why Invest?

Although this question may seem redundant, it’s something you should definitely ask yourself before we go any further. Why do you invest in crypto? Do you like the underlying technology, or are you simply after the profit? Do you keep up with the new projects popping up, or do you just buy your favorite tokens and coins, like SHIB or Bitcoin?

What do you feel when you see that a coin is crashing? Do you begin convincing yourself that you only need to wait just a bit more, and it will rise again? Or do you instantly get the urge to sell?

We cannot give you financial advice, but we hope that some of these questions can help you to decide whether you want to stay in this market or not.

Bitcoin in a cart

So, What Is Going on With Crypto?

Are we going through a typical crypto market cycle, or is this something more serious and possibly long-lasting? Well, only time will tell. Meanwhile, however, we can look at some clues.

The End of Terra..?

In a way, Terra’s crush has kickstarted a new wave of the bear market. Besides costing its investors millions of dollars, it has also shaken people’s faith in one of the biggest axioms of the crypto market — stablecoins are stable.

The crypto market is incredibly reliant on investor sentiment, so anything that makes the average investor doubtful, worried, or anxious leaves a mark. However, this is not the first time something controversial happened in the crypto industry (and it definitely won’t be the last). Scams and theft are ever-present in the crypto markets, and those huge scandals didn’t manage to “burst the bubble” even when the industry was much smaller and had less public recognition and appeal.

The Terra incident actually highlighted just how big and strong the cryptocurrency market is now — it was able to (relatively) painlessly absorb such a huge loss. Not to mention, it was a good learning experience for everyone involved, from project owners and exchanges to regular traders.

A Little Bear That Could

Since crypto assets have no regulation, prices are set pretty much exclusively by actual market participants. This has always been a cause for concern — after all, who wants to lose their life savings just because some whale decided they’ve had enough of BTC?

Recent events and Bitcoin’s inability to rise to at least $40K again have turned a lot of whales bearish. This is a worrying sign: if all of the biggest BTC holders start selling off their crypto holdings, Bitcoin, and with it, the whole cryptocurrency market might start going down.

However, history shows that whale price movement, although significant, cannot crash big cryptocurrencies, such as Ethereum or Ripple. Plus, it seems like crypto investors that only hold $10K worth of Bitcoin and less are showing no signs of capitulation. This clearly demonstrates that despite many challenges, the public still believes in crypto and Bitcoin’s message and sees it as a relatively reliable store of value.

How Can Bitcoin Recover?

Let’s imagine that all the whales decide to sell off their BTC holdings. Of course, that would lead to massive price drops not only for the crypto in question but also for the whole market. But will it really tank all the crypto projects available on the market right now?

Ethereum, Solana, and many other cryptos are now a lot more than just means of payment — they’re whole ecosystems of interconnected projects. Crypto tokens and coins have value beyond being speculative assets. The market has already shown many times that it is good at adapting to changes and overcoming obstacles — so who’s to say it won’t do it again?

It remains a question whether Bitcoin will ever be able to go up to $60K again and then cross over the $100,000 mark. However, it may not need that to remain impactful and to bring its holders profit.

It has never been Bitcoin’s (or any other crypto’s, really) goal to become the number one biggest asset in the world. It was meant to be used as a means of payment, and to do that, it does not need to be worth dozens of thousands of dollars. 

The World in Disarray

It is important to note that it’s not just crypto that is struggling right now. The whole global economy is in a weird state — it has been like that since the beginning of the pandemic. We seem to be due for a reset, and many experts are now predicting an inevitable global recession. Cryptocurrency, and many other risk assets, such as tech stocks, have suffered a lot from the recent inflation.

Considering crypto has always been seen by many as a wacky gimmick, it is admirable how well it has been holding on for the past few years. Nonetheless, current events are sure to leave their mark on crypto. Although many investors may turn to it as an alternative to banks and the stock market, the average income level is likely to fall, leaving people with less money to invest.

What the Future Holds

To conclude, I would like to give some of my own thoughts on this matter — please note that this is subjective and should not be seen as investment advice.

Crypto is not just a volatile market — it is an unpredictable one. And for me personally, as a crypto investor and enthusiast, this has always been one of its strengths. After all, true innovation cannot be predictable and boring. 

Having been in this industry for quite a while now, I know that it is filled to the brim with talented, ambitious, and driven people. Above all else, I believe that they will continue coming up with new technologies and innovative ways to utilize old ones. This might sound cheesy, but I do believe in crypto.

The way I see it, the crypto market is still the same as it has always been — going through turmoils and looking for ways to overcome all the obstacles. I am definitely rooting for it, but I understand why some people may decide to leave the industry now. After all, it’s all up to how you see crypto and what your investment goals are.

Disclaimer: Please note that the contents of this article are not financial or investing advice. The information provided in this article is the author’s opinion only and should not be considered as offering trading or investing recommendations. We do not make any warranties about the completeness, reliability and accuracy of this information. The cryptocurrency market suffers from high volatility and occasional arbitrary movements. Any investor, trader, or regular crypto users should research multiple viewpoints and be familiar with all local regulations before committing to an investment.