- This year has left both bullish and bearish investors stunned as the volatility of the market has sharply pivoted in both directions.
- Good news has been prominent in the crypto space with coins hitting their highest market capitalization to date, institutional investors getting on board, etc.
- Bad news has also crashed the market to new lows, wiping billions from the market capitalization to the detriment of bullish investors.
- Experts still predict a status quo through to the end of the year.
This has been a turbulent, yet exciting year for the market in which both traders and analysts have learned plenty along the ride. The volatility of cryptocurrencies has long been known, but what has stood out so far is the quick succession of interchangeably good and bad news in the market.
While the year started well with coins rising and hitting new breakpoints, tragedy soon struck as climate regulations came to the fore, occasioning the Chinese mining ban. Binance and other exchanges have experienced growing mass adoption, however crypto scrutiny has hit even them, and they may not shake it off so easily.
The Market Is Rosy
Bullish investors and crypto enthusiasts have had their fair share of joy this year. Initially, the market capitalization topped $2 trillion as all sectors experienced the boom. Mass adoption has benefitted every sector, from cryptocurrencies to NFTs.
More users have adopted crypto this year because of improved confidence in the market. Elon Musk’s Tesla applied Bitcoin as a payment option and bought $1.5 billion worth of Bitcoin.
Michael Saylor has particularly pushed the envelope for Bitcoin as MicroStrategy and its subsidiaries continued to acquire more bitcoins. Big banks have increased their presence in the crypto space as well, with some offering new crypto products to their customers, while others got involved this year.
Things Are Going South
Despite the widespread successes enjoyed by cryptocurrencies this year, events soon turned sour. The centrepiece of the negative turnaround was the alleged negative impact that cryptocurrencies have on the climate.
As multiple Chinese cities failed to meet their climate targets, the nation resorted to a ban on crypto mines, which almost entirely wiped out all of the gains from the first quarter.
Tesla also dropped Bitcoin due to similar environmental concerns. The mining of crypto is its driving force, and with the mines down everything went south. Aside from mining, exchanges like Binance have similarly come under the eye of regulators in multiple countries, perhaps most notably in the U.K. It has been a rough path for the cryptoverse thus far.
On The Flipside
- The mining ban has resulted in solar mines springing up, which has in turn reduced the over-dependence on China.
- A section of analysts believe that the market correction was bound to happen following its exponential price growth.
What Does the Future Hold?
Moving forward from a period which has stunned both bullish and bearish investors, everyone is now looking toward the future. Experts on both sides of the coin are predicting how the year will end.
At the start of the year, during the surge in prices, market bulls predicted bitcoin to rise to a value of $100k by the end of the year. Though this hope appears bleak at this point, all hope is not yet lost.
The crypto mining ban and the resulting scrutiny may have been a blessing in disguise for the market. Primarily, the industry’s dependence on Chinese will be reduced and crypto will become cleaner, which is a win on both accounts.
It is pertinent to remember that the United Nations has endorsed blockchain technology for deployment to tackle climate change. On the other hand, the price correction may not be over yet, as the market’s woes may linger through the coming months.