Anyone with money in cryptocurrencies right now probably isn’t in a particularly good mood. Bitcoin and other popular cryptos are hitting an all-time low, so much so that some are even predicting a total collapse of the market. A total collapse may not be on the cards, but there is certainly room for major concern. What is happening to cryptos, and should everyone be abandoning ship?
The short answer is that the global economy is not in a good place, and as such virtually all markets are struggling. The world health crisis, follow by an unexpected war in the Ukraine, has caused a major upset. Hence, the global economy is struggling with fear, which in turn impacts risk focused investments. Given that cryptocurrencies are still relatively new, investment in the market still comes with a healthy dose of risk.
Losses Across The Board
Coinbase is dedicated to crypto trading and tracking and is seen as a good indicator of the market as a whole. That Coinbase took a loss of $430 million in the first quarter of 2022 is the biggest red flag that exists. The company even had to lay off about one fifth of its staff, which is the equivalent of the warning canary turning up dead.
But the losses aren’t exclusive to cryptocurrencies. The Dow Jones and S&P 500 saw a similar hit, indicating that the problem is macro, and not micro. In other words; the challenge is not with the crypto market itself, but rather a bigger, global issues.
But does this mean that investors should simply cash in all their cryptos, grab an online casino welcome bonus, and say goodbye to the market entirely?
Maybe not.
The Possibilities Of A Revival
The world economy has suffered many ups and downs, and history says that it has always come back stronger than ever. But the world economy, by its very nature, has nowhere to go but up after it has been down. Cryptocurrencies do not have a similar luxury. Given that the economy exists outside the global economy, the market can indeed crash and never return.
But even in its brief history, dating back to 2011, Bitcoin has come back from the dead on many occasions. Bitcoin numbers have dipped to near zero, only to bounce back and into the stratosphere. All signs point to Bitcoin making a recovery, but the same isn’t true for some of the alternatives. Either way,holding on to a currency in spite of hardships is often where the biggest gains are made.
With that being said, a global recession is now settling in after the drama of the world health crisis. The situation is not being helped by rising fuel prices across the globe, thanks to the Ukraine war. Crypto has, and probably will, still for some time be a risky investment. Those who choose to weather the storm may be rewarded, but that is up to the individual to decide. It is only a matter of time before the global markets bounce back, either way.
