Will crypto recover? How much the Bitcoin price has crashed and what experts predict for the future
The cryptocurrency market shows no signs of imminent improvement, as a violent year for crypto investors continues.
Bitcoin remains stable at around $ 20,000 (£ 16,750) and has lost more than two-thirds of its value since reaching a record high of $ 68,000 in November last year.
The news has not been better for other coins. Ethereum is worth less than a quarter of its high value of 4,700 dollars, while some coins, such as Terras Luna, completely collapsed and cost investors billions.
Crypto has declined significantly throughout the year. Here’s what you need to know about the elongated crash and what experts say about a possible recovery.
Why has cryptocurrency suffered?
Cryptocurrency has been struggling for several months. This has been caused by a number of factors, from rising inflation to increased regulation and degradation of crypto mining in countries such as China.
Investors seem to be moving away from cryptocurrency and towards less risky investments in the face of global inflation.
Analysts at the crypto exchange Bitfinex said: “Spiral inflation levels have caused global financial markets to stare into the abyss while the prospects for a global recession are great.
“This makes all assets that have benefited from more than a decade of accommodative monetary policy from central banks vulnerable to a correction when interest rates rise.”
Morgan Stanley says that the interest of institutional investors in cryptocurrency makes it more sensitive to changing interest rates, and makes it behave more like the traditional stock market.
“Retail investors are no longer the dominant crypto-trader. The largest share of daily crypto-trading volumes is from crypto-institutions, much of which comes from trading with each other. For example, stock exchanges, managers and crypto funds,” the company wrote in a note.
“Retailers were dominant about four years ago, when Bitcoin traded below $ 10k. We believe the increased commitment from institutions, which are sensitive to the availability of capital and thus interest rates, has partly contributed to the high correlation between Bitcoin and equities.
Crypto has also been hit by several bad news, including Luna’s collapse and lending site Celsius freezes all withdrawals and transfers on its platform.
Will cryptocurrency recover?
Changpeng Zhao, the founder of the world’s largest cryptocurrency exchange, Binance, has said that Bitcoin could take years to recover from the recent crash.
“I think given this price drop, from the all-time high of $ 68,000 to $ 20,000 now, it will probably take a while to come back. It will probably take a few months or a couple of years,” he said.
However, other experts remain positive about the future of crypto.
Kiana Danial, founder of Invest Diva and author of Investing in cryptocurrency for dummiessaid: “What I expect from Bitcoin is short-term volatility and long-term growth.”
The four major accounting firm PricewaterhouseCoopers published its fourth annual report on global crypto hedge funds earlier in June.
The results showed that “while the overall crypto market was quite bearish, executives remained extremely positive on BTC”, with 42 percent predicting that Bitcoin would be between $ 75-100,000 (£ 62,000- £ 83,000) by the end of 2022, and a further 35 percent predict a price over $ 50,000 (£ 41,000).
How risky is cryptocurrency?
People invest at their own risk and cryptocurrencies are not regulated by the UK financial authorities.
All crypto investments are risky, but meme coins like Shiba Inu are particularly volatile, and you should be prepared to lose everything you invest.
The Financial Conduct Authority warned in January: “Investing in cryptocurrencies, or investments and lending related to them, generally involves taking very high risk with investors’ money.
“If consumers invest in this type of product, they should be prepared to lose all their money.”
Susannah Streeter, senior investment and market analyst at Hargreaves Lansdown, has previously explained the risk of I.
She said: “In addition to being extremely volatile, most cryptocurrencies are unregulated, which not only adds a new layer of uncertainty, but also means that investors have little or no protection against fraud.”
