Will Cryptocurrency Price Bounce Back? – Market Crash 2022

Will Cryptocurrency Price Bounce Back? – Market Crash 2022

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February 22, 2022 by hashnews
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Meta Title: Will Cryptocurrency Price Bounce Back? – Market Crash 2022   Meta Description: The crypto market had a bad start in 2022; however, things are looking up. Crypto experts expect that the market will slowly and steadily become better. Alt Text: Market Crash 2022   2021 was a bullish year for the crypto market.
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Meta Title: Will Cryptocurrency Price Bounce Back? – Market Crash 2022

 

Meta Description: The crypto market had a bad start in 2022; however, things are looking up. Crypto experts expect that the market will slowly and steadily become better.

Alt Text: Market Crash 2022

 

2021 was a bullish year for the crypto market. In November 2021, Bitcoin and Ethereum reached their all-time high valuation. Sentiments around the crypto investments were going rather strong until January 2022, when the market suddenly crashed, with Bitcoin losing over 45% of its valuation, followed by Ethereum and others because of the cascading effect of the market. The crypto market has been a volatile market since its initial days, and it is not unlikely to see sudden rises and falls in the market. But the 2022 market crash is considered one of the major ones.

What were the reasons for the market crash of 2022?

Much like any investment collateral, cryptocurrencies are also influenced by economic, geopolitical, and other factors. There were several reasons for the 2022 crash.

 

  • As 2021 ended, the spread of Omicron led to uncertainty in all markets, and it also affected the cryptocurrency market. 
  • The Federal Reserve announced that it intended to cut back on its pandemic stimulus to the US economy, leading to the falling of the US stock markets. There were also reports of the Federal Reserve’s three-time interest rate hike in 2022 and speculations on the agency regulating cryptocurrencies in the US. In the aftermath of all of this, assets like cryptocurrencies plummeted worldwide.
  • Along with the above factors, other geopolitical reasons—like the internet blackout of Kazakhstan that led to the shutdown of the mega-mining computers—contributed to the falling of the cryptocurrency market.

Impact of the devaluation of the cryptocurrency market

The market crash of 2022 and the falling of the cryptocurrency valuations are also expected to have a long-term effect on the cryptocurrency ecosystem, for the better. Some of these impacts include:

  • The government is getting more involved in the regulation of cryptocurrency. As mentioned earlier, the US government is planning to get involved in cryptocurrency regulation. In India, the recent Union Budget announced that gains from crypto investments will be taxed at a flat 30% without any exemptions. The idea is to streamline and understand the depth of the market.
  • A huge number of crypto investors are retail or individual investors. Owing to the market crash and the tax regimes, it is likely that the number of such investors will dip down for a while until the market stabilises.
  • Institutional investments in crypto will continue, given this will be the right time to make big investments in the market and reap benefits in the long term.

Will the market bounce back?

The crypto market had a bad start in 2022; however, things are looking up. Crypto experts and supporters expect that the market will slowly and steadily become better, and we are already seeing the signs of it. By the end of January, the cryptocurrency market cap increased marginally and the market stabilised further. In the first week of Feb, the valuations of Bitcoin and Ethereum saw a steady rise of 8% and 15% respectively.

 

Though there’s a decline of investments from individual or retail investors, that is also expected to see a turnaround. Any investment asset sees changing of hands from institutional to retail in cycles. Currently, even in light of the 2022 market crash, there are ongoing institutional investments in cryptocurrencies. Along with it, leading crypto are being institutionalised and seeing real-world use with DeFi (Decentralised Finance). There’s a deluge of investments in the crypto ecosystem from large-scale investors. For example, lst year, El Salvador, the Central American country, legalised Bitcoin. After the recent dip, the country bought a batch of 410 more tokens for a valuation of $15 million (approximately Rs. 110 crores). 

 

In India, we are seeing enterprises opening up to crypto investments. Recently, T-Series, the popular music company, announced its plan to experiment with NFTs. The company has teamed up with Hungama TV’s venture Hefty Entertainment, which is supported by Polygon Blockchain, an enterprise that supports Ethereum infrastructure development and scaling. Hungama will be creating NFTs from T-series content.

 

A recent Deloitte and Times of India survey predict that regardless of whether the Cryptocurrency Bill gets passed in the winter session, more than half of respondents would still invest in crypto.

 

Though concerned, Crypto investors aren’t showing negative sentiments towards the investment. This might mean a dip, but optimism around the market may indicate that it will see a positive turnaround soon. That has already slowly begun.

 

Certain enterprises are already trying to make it easier for investors to invest in the crypto market. For example, Clear (earlier known as Clear Tax) has launched a crypto tax and portfolio management service for institutions and retail investors. In 2021, Morgan Stanley became one of the first US banks to offer their HNI clients access to bitcoin funds.

The silver lining

The crypto market is known for its volatility, with streaks of ups and downs. While the 2022 market crash was one of the major ones, things are getting better and the market is slowly seeing green streaks. While 2022 started on a cloudy note, there seems to be a silver lining ahead. It will make sense for crypto investors to be informed on not just the fluctuation in the valuations but also other factors that might affect the investments. 

 

At ZebPay, the leading cryptocurrency exchange in India, you can monitor the valuation of various cryptocurrencies and invest in fast, simple, and secure ways.

Sources: 

https://www.coingecko.com/

https://gadgets.ndtv.com/cryptocurrency/news/tseries-hungama-tv-web3-hefty-entertainment-nft-metaverse-2727131