Has winter arrived for cryptocurrencies?

26 January 20222 years ago babelfish

In three months, the cryptocurrency market has lost over a trillion and bitcoin has dropped below $ 33,000. Not all analysts, however, think the sector is in crisis. Here because

In three months, from November to today, the cryptocurrency market – the digital currencies that allow you to transact through cryptography – has lost more than a trillion dollars in value.

HOW THE BITCOIN GOES

Bitcoin, the most popular cryptocurrency, dropped below $ 33,000 on Monday, the lowest level since last July. It then recovered, positioning itself above 36,000 dollars, but its value is still almost 50 percent lower than the record reached in November: almost 69,000 dollars.

HOW DO ETHER AND SOLANA GO

Compared to the peak in November, other important cryptocurrencies, such as ether and solana, have also lost a lot: the value of ether, for example, has since halved; the Solana one dropped even more, by 65 percent.

THE WINTER OF CRYPTOCURRENCIES?

CNBC writes that it is possible that "winter" has come for cryptocurrencies, that is, a situation in which the market for these currencies tends to fall ( bear market , in technical jargon). It has already happened, for example in 2017 and early 2018, when bitcoin plummeted to 80 percent.

FOR SOMEONE IT HAS ARRIVED

David Marcus, who has dealt with cryptocurrencies in Meta (formerly Facebook), wrote on Twitter that “it is during the crypto-winters that the best entrepreneurs build the best. It's time again to focus on solving real problems against token pumping ”. By token we mean the information present in the blockchain that guarantees a person the right to a sum of cryptocurrencies.

It's during crypto winters that the best entrepreneurs build the better companies. This is the time again to focus on solving real problems vs. pumping tokens.

– David Marcus – dmarcus.eth (@davidmarcus) January 24, 2022

FOR SOMEONE, NO

Nadya Ivanova, chief operating officer of L'Atelier, a technology research company linked to the BNP Paribas group, told CNBC that she does not believe that "the winter of cryptocurrencies" has come: rather she claims that the market is going through a period of "Cooling", and that may not be a bad thing.

“Over the past year,” he explained, “especially with all the hype in this market, many developers seem to have been distracted by the easy money speculation on NFTs [ non-fungible tokens ] and other digital assets. A cool-down period could actually be an opportunity to start building cryptocurrency market fundamentals.

LINKS BETWEEN CRYPTOCURRENCIES AND "TRADITIONAL" MARKETS

According to various analysts, the events of digital asset markets are increasingly linked to those of "traditional" markets. Since the beginning of January, the S&P 500 index, which gathers the five hundred largest US companies, has lost 8 percent; the Nasdaq index (the leading electronic stock market) lost more than 12 percent. According to CNBC , there would be correlations between the performance of bitcoin and that of the S&P 500.

THE ROLE OF THE FED

Traders, in particular, fear that any hikes in interest rates and aggressive monetary tightening by the Federal Reserve (the central bank of the United States), which wants to counter the rise in inflation, will drain the liquidity of the market. market. According to the most concerned analysts, this line would end the era of ultra-cheap money and high valuations in the fastest growing sectors, such as technology. This sector – explains CNBC – particularly benefits from low interest rates because technology companies usually ask for loans to invest in their businesses.

IS IT STABLECOIN TIME?

The cooling of the cryptocurrency market is proving very positive for stablecoins , i.e. those digital currencies that track the value of national currencies (such as the US dollar, for example). Since last Sunday, the USD Coin – the second largest stablecoin – has gained more than $ 5 billion in value.

TIME FOR ADJUSTMENTS?

Luno's Vijay Ayyar told CNBC he believes the current downturn in the cryptocurrency market is not the beginning of a sustained downside, but a "correction." Bitcoin is volatile, it tends to fluctuate a lot in value. “The corrections for bitcoin are usually in the 30-50 percent range, which is where we are now. So we are still in normal correctional territory ”.

According to him, if bitcoin were to drop below $ 30,000 within a week or more, then the probabilities of a bear market would increase a lot. However, he does not think that the cryptocurrency can go down to 15,000 dollars.

CLOSE ON MINING

Cryptocurrency investors are watching carefully at the moves of governments, which are preparing restrictive measures to mining , that is to the (particularly energy-intensive) activity of "extraction" of new currency. In addition to China, Russia is also considering banning the use of cryptocurrencies and mining, to reaffirm state control over the financial sector. The US is also expected to publish its cryptocurrency regulation strategy next month.

This is a machine translation from Italian language of a post published on Start Magazine at the URL https://www.startmag.it/innovazione/criptovalute-crisi-crollo-bitcoin/ on Wed, 26 Jan 2022 10:09:22 +0000.