Crypto Winter Rumors Abound, But Experts Say Increased Adoption Could Temper Results

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Cryptos have been crashing since the start of the year, reigniting rumors of a potential crypto winter. However, several experts disagree with this premise and point out the differences from previous crypto winters, notably that of 2018, saying that this time around, increased adoption will help temper the current bear market.

See: Bitcoin Trends for 2022 According to Experts Find: Best Undervalued Cryptocurrencies to Buy for 2022

Since hitting an all-time high of $69,000 in November 2021, Bitcoin has suffered one of its biggest pullbacks, the 52.3% drop from the peak so far, ranks 6th rank in bitcoin history, according to a report by NYDIG.

This is a strikingly similar decrease and duration to the drawdown seen in the spring of 2021, with the caveat that this drawdown may continue to increase. The three largest bitcoin drawdowns were also the longest, coinciding with the end of cyclical price increases.

Some pundits believe we’ve already entered another so-called crypto winter, including David Marcus, former head of Novi at Meta, who tweeted on January 24 that it’s during crypto winters that the best entrepreneurs build the best businesses. . Now is the time to focus on solving real problems with token pumping.

While many investors are reeling from their losses, not everyone agrees that the current situation can be compared to the crypto winter of 2018, when Bitcoin fell over 75% per month. compared to previous peaks, according to Barrons.

Josh Olszewicz, head of research at Valkyrie Funds, told GOBankingRates that the decline in this market could be similar to what we saw in 2018, and a correlation with the specter of rising interest rates is notable, but the market is not the same as it was then.

Venture capital inflows reached a record $33 billion last year, and much of those investments are being made in the pipes that are building the financial system of the future, Olszewicz said, adding that Bitcoin, for its share, was adopted by El Salvador as legal tender. and many other countries are considering doing a similar move.

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He noted that another point of difference is that there are several exchange-traded bitcoin spot products outside of the United States, in addition to bitcoin futures exchange-traded funds and other ETFs. These provide indirect exposure to Bitcoin trading in the United States, alongside the many companies that hold Bitcoin in their treasuries, which he describes as a massive leap forward for digital assets.

Of course, things are looking a bit gloomy at the moment, but we hope the stage is set for a strong rally and we remain much more optimistic that this is just a correction before consolidation leading to a resumed earlier than expected, he added.

Reeve Collins, co-founder of BLOCKv, also told GOBankingRates that a crypto winter this time around is likely to be very different from the last, largely because the space has grown not just in size but also in features and functionality. participating players.

The things crypto can do now without banks with DeFi, NFTs, and even fun games would blow the OGs of the last cycle of 2017-2018, Collins said. So, even if we see steep price drops, the building of truly useful projects in the cryptoverse will continue rapidly and, in turn, drive adoption even further. So for most people, including investors, I think it’s good to zoom out, not be too afraid of volatility and focus on quality projects. This moment, when we look back in time, will be considered a crypto spring.

The sentiment is echoed by many in the industry who believe this crash mirrors that of last May when prices rallied in just a few months, including Josh Goodbody, COO of Qredo, who told GOBankingRates that there is little likely to be another. prolonged crypto winter and is more likely to be a period of near-term bearish sentiment.

See: Will 2022 be the year of a Bitcoin Spot ETF? Find: 5 of the most crypto-friendly banks

Price action is a distraction from our core mission to rebuild the financial industry and change the way the internet works. It will take a lot more than a quick selloff to get us back into a crypto winter, Goodbody said.

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This article originally appeared on GOBankingRates.com: Crypto Winter Rumors Abound, But Experts Say Increased Adoption May Temper Results

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