With the latest price crash of Bitcoin & Co crypto folks are getting nervous. And yes, we are in the middle of crypto winter, with no end in sight at the moment. On the contrary: markets will remain rough, and yes, two difficult years are ahead for cryptocurrencies. Why?
- Last week's interest rate hike by the US Fed heralds a turning point. Now inflation is being actively fought by the world's most important central bank. Critics claim Bitcoin offers no hedge against inflation. Exactly the opposite can be noticed. If central banks fight inflation and safe haven Bitcoin comes under pressure. And also gold prices were down this week.
- 2021, many technology-savvy people newly entered crypto markets and used crypto exchanges that offer cryptocurrencies in addition to technology stocks. Tech stocks in particular came under heavy pressure due to Covid, supply chain problems with China and the Ukraine war. The crash of tech stocks dragged cryptocurrencies with it. And the turmoil in stock markets remains.
- There is a major cycle in Bitcoin that affects all cryptocurrencies: Every four years there is a "halving", the halving of the miners' payment, and with it Bitcoin gets new momentum, but the next halving is not until 2024, therefore a bullish market just illogical at the moment. See Bitcoin halving countdown.
In such phases I try to keep a calm head: there is great news from the crypto sector, which is currently hardly reflected in prices:
Spotify is interested in crypto, and Instagram plans to integrate Ethereum, Solana, Polygon and Flow NFTs. The vision of a Web3 and the metaverse offers opportunities for new business models, brands like Nike, Adidas but also NGOs are already using the possibilities of blockchain and NFTs.
Bitcoin is under pressure, the next levels to watch out for are historical levels of $30.000 and $24.000. When market participants are full of fear, positive news goes down as a sign of a young volatile market: either totally overheated and pumped up by influencers, or - as now - oversold, despite excellent long-term prospects and good news. Crypto whales and big investors are buying very selectively right now, by the way; coin picking can pay off.
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