Are digital currencies collapsing? What are the expectations of experts for its prices in 2022?

Experts expect that there will be a greater dispersion between digital currencies in 2022 due to the significant rise of a number of currencies, such as Solana and Avalanche.

The cryptocurrency market is witnessing a major crash, especially the two largest currencies, “Bitcoin” and “Ethereum” which have witnessed a huge decline in the past weeks and months, while economic analysts expect that the coming weeks will witness more collapse.

Bitcoin continued its decline to its lowest level in more than 6 months, due to the continued sale of high-risk assets at a rapid pace in the world against the background of the crisis in Ukraine.

On Monday morning, Bitcoin rose to the $36,000 level, but it didn’t hold much.

This decline lost Bitcoin more than half a trillion dollars of its market value, with digital currencies losing more than one and a half trillion dollars.

Bitcoin has fallen by more than half compared to its value in November, when it approached 70,000.

There is another reason for what is happening to Bitcoin. Expectations to raise US interest rates at the Federal Reserve meeting today, Monday, and the day after tomorrow mean a decline in the revenues of stocks, currencies and risky assets such as digital currencies; This is why investors are currently avoiding it.

Sharp decline of Bitcoin and Ethereum

And timely publication American Fortune An article by its economic editor, Annie Sreaders, in which she monitored the great collapse that hit the cryptocurrency market in the past weeks and months, as the two largest currencies, Bitcoin and Ethereum, fell by more than 40%, since mid-November, as the price of Bitcoin fell to less than 37 thousand US dollars, while in November it amounted to 69,000 dollars, according to the site.

The writer explained that significant declines in the price of digital currencies such as Bitcoin are not surprising to cryptocurrency investors in the long run, noting that there are signs of diminishing confidence in strong digital assets, according to Jeff Dorman, chief investment officer at Arca. To invest in cryptocurrency.

The writer pointed out that the decline of Bitcoin coincided with a decline in the entire market, especially in more risky assets such as growth and technology stocks; The tech-heavy Nasdaq finally fell into the correction territory defined as a 10% drop, showing that the correlation between Bitcoin and assets like tech stocks is not a new trend.

What are the reasons for the decline?

The writer reviewed a number of reasons that led to this significant decline in cryptocurrencies, according to the opinion of experts who confirmed that:

  • One of the most important reasons is the policies of the US Federal Reserve (the US central bank), which decided to raise interest rates at its meeting last November to confront inflation, which was considered a reverse shift in the policies that boosted digital currency prices in 2020.

The writer quoted Dorman as saying that this recent collapse has cracked the argument that classifies Bitcoin as safe from inflation, pointing out – according to the author – that Bitcoin is now being traded as an indicator of overall risk by governments and traditional financial institutions, stressing that this will continue in the short term Although he does not see that it will remain the prevailing belief for a long time.

  • The writer pointed out that one of the other reasons that led to the decline in the price of Bitcoin is that dealers in the cryptocurrency market prefer to deal with the alternative currencies that people bet on, noting that currencies such as “Solana” and “Polkadot”, and “Cardano”, and “Avalanche” (Avalanche) On its way to becoming a major cryptocurrency in competition with Bitcoin and Ethereum; These currencies have shown success in transactions in the cryptocurrency market at the expense of Bitcoin, confirmed Edward Moya, senior market analyst at Oanda cryptocurrency.
  • In her article, the writer added, citing Edward Moya, that the global energy crisis and Russia’s threat to ban the use of Bitcoin are among the reasons that make it difficult for Bitcoin to stabilize the price and trade in the cryptocurrency market.

future predictions

In an extrapolation to the future, the writer emphasized that talking about what the cryptocurrency market will become depends on each currency and its performance in itself. It has a minimum trading limit and 50 thousand dollars in its maximum trading limit.

Moya indicated that he expects Bitcoin to stabilize after raising interest rates again by the US Federal Reserve, expected in the first quarter of 2022, and to reach $60,000 by the end of the year.

With regard to the Ethereum currency, Moya expects – as the writer said – to reach its maximum trading limit this year of more than 4 thousand dollars, up from the price of 2600 dollars at which it is currently trading, indicating that it is currently losing weight in the market in favor of other currencies.

The writer quoted Yuya Hasagawa, a crypto market analyst at the Japanese cryptocurrency exchange Bitbank, that he expects Bitcoin to reach its minimum trading level of 28 thousand dollars, but it could reach by the end of the year between 60 and 80 thousand. Dollars, while Jeff Dorman, chief investment officer at cryptocurrency investment firm Arca, said the Bitcoin price drop was exaggerated.

The writer emphasized that each digital currency has its separate performance from the performance of other currencies, noting that experts expect a greater dispersal between digital currencies in 2022 due to the significant rise of a number of currencies such as Solana and Avalanche.

At the same time, she indicated that the world of digital cryptocurrency in which many variables occur due to panic in the market, which leads to decline in some sectors and rise in others.

Leave a Reply

Your email address will not be published.