The current state of the cryptocurrency market

CRYPTOCURRENCY?

I’ve been asked a number of times to give my take on the current state of the market. So here it is.

The cryptocurrency market has taken a beating so far in 2022, down more than 30% on average with an equivalent loss of more than £522 billion. Thats equivalent to the total wealth held by Ukraine or 0.12% of all world wealth. No small number. This collapse reverberated throughout the market with leading cryptocurrencies continuing suffering heavy losses.

  1. BTC fell below the $40,000 threshold last week, it’s lowest level since August 2021 amid the Russian central bank’s proposal to ban cryptocurrencies and crypto exchanges whilst the UK Government announced legislative plans to tackle misleading cryptoasset adverts.
  2. The collapse of BTC has lead to a decline in the altcoins. A lot of people are asking me about ETH and it’s decline. You need to see BTC’s relationship to the altcoins; institutional investors often consider BTC as the reserve currency of the cryptocurrency market; similar to the dollar/USD in the global stock markets, so it’s understandable to see the whole market drop when BTC’s market sentiment plummets.
  3. The unrelenting decline in digital assets and seemingly constant cadence of negative news can be discouraging. But this comes with the territory of any investment class. I have said before that the attitudes and psychology of the mindset plays a role in defining resilient economies, it works both ways.
  4. Many believe $40k is the proving ground for BTC. If we find support here, maybe this is a big consolidation before the next bull run. If we don’t, this could set to continue amid a wider market sell-off. For how long, God knows.
  5. The constant development and further utilisation of the blockchain shows the potential that this technology offers. The emergence of NFTs are a large factor to this, more on that next time.
  6. Volatility is an inherent attribute of cryptocurrencies and the prudent investors can use its perpetual state of flux to their benefit. As I’ve said in the property market, any wide swing, breeds an opportunity to capitalise on, it’s a time to buy proven assets at discounts. If you’re in the bracket “I wish I bought at $30k, or ETH at $2k”, well here is your chance. I see ETH hitting $2100 very soon. The bounce should take us back up to $3000 minimum, my target is around $3300 before we come back and break the lows again.