DUBAI, UAE — The value of cryptocurrencies may continue to decline this year. After recording its highest value of about US$ 69,000 in November 2021, it dropped to around US$ 50,000, nearly 30 percent.
Although Bitcoin and Ethereum have rallied in recent weeks from their all-time highs reached at the end of 2021, the crypto market has stalled overall due to their dismal performance in the year’s first half. So what does 2022 bring with it to cryptocurrencies?
Although no one can predict where the price of cryptocurrencies will go in the future, some analysts believe that they could fall even deeper before staging a sustainable recovery.
Senior Market Strategist – MENA at Exness, Wael Makarem, explained that cryptocurrencies could continue under pressure if inflation surprises on the upside.
At the same time, investors are becoming more afraid of a possible recession, Makarem mentioned. In an interview with TRENDS, he added: “These factors combined have affected investors’ risk appetite and could continue to do so, pushing them away from risky assets like cryptocurrencies.”
Another side of the story
Other experts don’t see a crash in 2022.
Jeffrey Krayem, ISLAMICOIN Founder/ Crypto and blockchain expert, believes in the crypto world and considers this year is a shifting point for all the projects that are joining this technology.
Krayem predicts that the crypto market will get healthy in the last quarter of 2022. While 2023 will bring with it un-expectable massive growth for most cryptocurrencies.
Experts’ predictions that the fourth quarter of 2022 would see a surge in digital currencies and crypto were dashed by the market’s inability to recover from the tremendous instability that plagued cryptocurrency prices throughout October.
As a result of September’s losses, significant cryptocurrencies like Bitcoin and Ethereum are now moving down the red index.
Lost Crypto
The US$2 trillion in lost market value for cryptocurrencies is one of the most prominent indicators of the severity of the collapse that has hit the crypto industry this year.
Yet, there is another tragedy! More than 12k cryptocurrencies have disappeared, also.
According to data source Nomics, 12,100 represents the total number of cryptocurrencies that have stopped trading this year and are thus destroyed; they are not technically over, but neither are they working.
Virtual currencies explicitly designed for use with blockchain projects are common and serve multiple purposes, including rewarding users and compensating developers.
During last year’s price spike, thousands of crypto firms issued additional tokens to support these projects. However, positive enthusiasm meant that the market absorbed most of them as prices rose.
Upgrades might help
Since it is the highest-valued crypto, bitcoin’s adventure is always a must-observe.
The Bitcoin blockchain finally received its long-awaited Taproot upgrade in November 2021, improving the token’s affordability, efficiency, and anonymity. As a result, an increasing number of people are using Bitcoin daily.
The increasing number of businesses accepting Bitcoin as payment bodes positively for the cryptocurrency’s future valuation. As of June 2022, Bitcoin was accepted as payment by 7,879 firms.
However, several foreign observers have noted that bitcoin and gold share some similarities, which may be another factor pushing the cryptocurrency’s price.
Both bitcoin and gold are seen as a natural hedge against inflation and have a fixed supply, so their parallels are hard to deny.
Value can be stored in them independently of governments or central banks, and they tend to have a low correlation to stocks and fixed income.