The crypto market, as we all recently witnessed, has undergone a notable plunge, and there is still no sign of recovery. What’s even worse is that all the countries that once were home to the growth of cryptocurrencies and the businesses associated with mining are now proposing or already have banned crypto-related businesses and even transactions. It is certainly not a good time for cryptocurrencies and the leader of this entire market, Bitcoin.
In this article, we will be taking the current state of realized losses and gains in the market and how the investors are reacting to this present scenario. With the constant fall being witnessed in Bitcoin and the entire crypto market, there is a question in everyone’s mind which goes like how much more loss will the current crypto market be able to succor. In addition to this, another doubt that is taking place in the minds of investors is whether there will be more short-term downside or not.
Well, talking just about what happened the last week, we have witnessed a surging level of realized losses on-chain during the latest plunge in the prices. In accordance with the data acquired by Cryptured.com, realized losses of more than $1 billion on a 7-day moving average have been a consonant roof for each new sell-off during the withdrawal over the last six months.
Along with this, we should lay an emphasis on the fact that serious derivatives liquidations drove the highest level in the last five years back in the month of May of the year 2022.
Crypto Investors’ Belief and Speculations Regarding Crypto 2022 Future
Amid this sharp slip for Bitcoin and other top coins in the market, such as Ethereum, Solana, and Cardano, many crypto investors have revealed their views regarding their speculations about the market. On Tuesday, February 1, 2022, the price of Bitcoin somehow managed to surge back up to roam around the levels of $38k-$39k in accordance with the data revealed from the latest market aggregators.
Well, there is no denying the fact that the latest gain in the market is a result of the downward slip. It has witnessed the price of Bitcoin hover below the levels of $33k for the first time since back in the month of July. Bitcoin touched the mark of $69k on some exchanges back in the month of November. Along with this, the second-largest cryptocurrency in the market, Ethereum, has also seen a massive drop in its prices on January 24, when the price fell to the mark of $2,176.41.
Since Bitcoin’s all-time high, the entire crypto market has decreased in value by over $1 trillion, which clearly reveals that there is extreme volatility in the market. As per some of the market analysts and believers in Bitcoin, volatility is part of the growth that the crypto industry will witness in the future. As the crypto market had given tremendous gains and returns on investment when its prices roared, it is evident that there will be drastic falls too in the market.
This situation, in terms of the crypto enthusiasts and community, is called a “crypto winter,” and it is a condition that comes after a steep decline in the prices of cryptocurrencies in the market. The decline is further followed by a prolonged period of flat trading, as we can see is happening at present. Either the market is going down significantly, or there is a slight increase in the prices just to sit in a stable position.
Hold Bitcoin for the Long-Term – Bitcoin and Crypto Market Believers
Furthermore, discussing other investors’ sentiments and views on the current crypto market, they are asking to consider the actual number of Bitcoin or any other potential cryptocurrency instead of considering the price in terms of the dollar. Bitcoin believers share a conception that this condition is just a short-term price effect happening.
Moving ahead to what the big investors or more commonly called ‘whales,’ are doing in this crypto market, they are considering this plunge an opportunity. As with big money comes great risk. That’s why the big investors come into the market when the prices are low, and the coins are available to purchase at significantly lower prices. So either these investors are doing dollar-cost averaging, or they are just buying the dip.
Peeking in almost every crypto community, we gathered together all the pieces of sentiment, and it basically suggests that the investors are here for the long run. These dips provide the investors with an opportunity to purchase valuable assets at lower prices so that even when the prices surge to just their normal levels, you can sit on profits. That’s the basic mechanism of how any market works.
Since the beginning of the year 2021, cryptocurrencies have been on the surge and have given humongous returns on investments to their investors. However, as the popularity of cryptocurrencies and projects based on crypto surged, so did the number of investors putting their capital in the crypto market. That’s the major reason why most of the investors are sitting on losses at present because they took positions that were already near the all-time highs of the market.
Reasons for the Fall and What to Take Away From This Article
There are various reasons why the crypto market is behaving this way, and the first is the announcement regarding the U.S Federal Reserve raising interest rates to tackle rising inflation and labor shortages. This will lead to an implementation of a tighter monetary policy to increase rates soon.
Another reason was the onset of another variant of the deadly COVID-19, Omicron, due to which many countries and influential states called for curfews and lockdowns. Additionally, the potential crypto regulation bill from the White House contributed to the factors that signaled the decline of the crypto market.
Well, as far as the path prediction of the crypto market is concerned, it should be noted that every significant rise in the market was following a crash in the market. However, you must do your own research before getting involved in any kind of investment. Be it any cryptocurrency or even stocks and mutual funds; you are advised to put your capital to risk according to your risk appetite.