The crypto crash Certain experts believe that the crypto market are likely to recover from the current downturn in the coming months. Others believe that the fear of investors is likely to remain for the short long.
The cryptocurrency market has experienced massive corrections in the past two months. Today the market cap has dropped to $949 billion, down from the $3 trillion peak it hit on November 20, 2021. In the face of rising inflation and rate hikes caused a major market sell-off in the crypto market. The traders and investors are contemplating whether crypto markets are likely to rebound this year. The crypto industry experts have different opinions about this.
Although some experts believe cryptocurrency markets will recover from the current downturn in the coming months, others believe that the investor skepticism is likely to continue to be a problem in the near long.
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"I am convinced that crypto will rebound. In August 2022, the bloodbath of crypto winter is expected to be done. At the end of December or in Jan. 2023 Bitcoin might reach an all-time high of $70,000," Dileep Seinberg, the founder and CEO of MuffinPay the utility token and bill payment spoke to FE Online.
"Few significant reasons other than geopolitical concerns are Crypto being recognized for its value and purpose. Regulations by the government are likely to be the main driver towards the end of this year's calendar," He added.
The relationship between financial markets and crypto is increasing. Cryptos have reacted in sync to the global financial markets, which are also being impacted by weak global cues.
Since inflation is expected to remain for a minimum of 2 years, analysts warn that an economic recession imminent could cause crypto markets to become unstable.
"Given the significant co-relation between the crypto and equity markets, macroeconomic challenges like a decade-long high inflation rate and rising prices for commodities adversely affect the crypto market. The aggressive stance of the Federal Reserve in the direction of quantitative tightening to curb inflation will only exacerbate the decline in prices of crypto. Because the US currency has been increasing at an average of 18 percent, which is three times more than growth and the rate of inflation is expected to remain around for a few more years and will not be a temporary in the sense of time," stated Sharat Chandra, Vice President, and Research and Strategy at blockchain-based identity management platform EarthID.
"Fed has a tough balance to achieve - to cut down on inflation while avoiding Stagflation. If Fed continues to increase interest rates, a recession will soon be upon us and send equity and crypto markets to a halt. Crypto markets will always be vulnerable and investors' trepidation will remain," he added.
Rajagopal Menon, Vice President at the cryptocurrency exchange WazirX stated that the rate of inflation worldwide has been a significant issue for investors. In the US it's at an all-time high of 8.6 percent and in UK around 9 percent.
"Interest rate increases across the major crypto countries are also becoming a major worry as they decrease liquidity. Both factors have brought about an enormous selling. In India the central bank has increased the total forecast for the FY23 consumers' price index by 6.7 percent that is higher than the goal of 6.7%. The Indian rupee has sunk to the lowest level in history at 78.28. Therefore, market has taken a watch-and-wait attitude as first indicators are already in the negative. We expect this bearish trend to last in the near term,"Rajagopal Menon Vice President of WazirX.
(Cryptos and other digital assets are not regulated in India. They are considered highly dangerous for investments. Consult your financial advisor prior to making any investment decision.)