2022 has been a difficult year so far for Bitcoin and other cryptocurrencies, and last week was one of the worst weeks. So what is really going on?
Bitcoin and other cryptocurrencies had a tough time week last week and 2022 so far has not been too kind either. Cryptos are currently facing a combination of diverse market pressures which could result in their prices falling even further. At the same time, these are newer and more changeable markets than other investments which could mean Bitcoin and any other cryptos suddenly see an uptick in value once again.
2021 was a good year for cryptocurrencies in general. There were an abundance of new coins introduced, a higher degree of interest by new and veteran investors, and a greater awareness by the mainstream market in general. Just looking at the value of Bitcoin shows how much growth there was last year. For example, Bitcoin started 2021 at around $30,000 and struck an all-time high of around $68,000 by November. Essentially, the price more than doubled in less than a year.
However, almost shortly after that November high, prices started to drop. By December 31st, Bitcoin was hovering around the $45,000 marker and throughout 2022 the price has continued to decline, even dipping below $30,000 last week. As CNN pointed out at the time, it was not just Bitcoin that was struck hard last week, with other cryptocurrencies including Ether and Dogecoin also affected. All of which may have many investors worried about what the rest of this year now holds, and just how low the price could drop by the end of the year.
A Year Of Uncertainty, And Not Just For Cryptos
How cryptos will fare in 2022 overall is a much difficult question to answer considering one of the key reasons why cryptocurrencies are suffering right now is instability in general. Although cryptos are often viewed as volatile by nature, similar markets have faced additional pressures that have impacted their value as well. Stocks, for example, have also been more volatile than usual and facing many of the same problems as cryptos, including impact from geopolitical tensions and rising inflation concerns. However, cryptos are also encountering other, more specific problems. Concerns around increased regulation have routinely impacted on the price with China’s crackdown and subsequent price crash last year a notable example. Even more recently, the price of the TerraUSD stablecoin crumbled, resulting in the Terra blockchain officially being halted and the de-pegging of UST from the US dollar. A development which unavoidably places further pressure on a crypto market that was already under pressure.
Of course, none of these actually means the rest of the year will follow the same path. For one thing, prices can, at any time, bounce back as quickly as they fell. It is also highly unlikely that many would disagree with the long-term value of various cryptos increasing well beyond not just their current level, but even the all-time high of November, 2021. The more challenging issue right now for investors, is whether the value of cryptocurrencies have reached their low point and will start to bounce back again, or whether they will continue to drop further? Unfortunately for Bitcoin and other cryptos, and just like the various shortages and current geopolitical tensions, only time will narrate the story.
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