Is it different this time? Analysts have described this year’s crypto crash – The Defiant
The most popular tokens of 2021 – Layer 1s, GameFi, Mem Token and DeFi 2.0 – are all down 75% from their all-time highs. When the market creates a crypto bracket for the winter, a question revolves in the minds of traders: how far can it go?
Those who endured harsh crypto winters in late 2018 and early 2019 may remember that BTC fell 83% after the 2017 high of $ 19,665 and ETH fell 94% to আগের 83 after the previous 11 months high of 4 1,448.
At the moment, almost six months after the all-time highs of BTC and ETH, the two largest cryptocurrencies are down 56% and 59%, respectively. If this cycle replicates the end, BTC will drop from উচ্চ 68,789 to উচ্চ 12,000 and ETH will drop from $ 4878 to $ 300.
Of course, no two cycles are the same. “It simply came to our notice then. Since the launch of Crypto, we’ve been on a decade-long bull run with low to zero interest rates, “said the author of the DeFi newsletter. Defy Edge Told The Defiant. “We are facing the highest inflation rate in 40 years. More money is needed to grow crypto and this is a terrible environment right now. “
Fed rate hikes
In fact, the Federal Reserve has doubled its targets this year to targets between 0.75% and 1% – up from about 0% in epidemics – money from crypto has been flushed into more stable assets, such as treasury bonds.
The Fed raised interest rates from 2016 to 2019, meaning the 2017 boom happened in the same situation. But in mid-2019, crypto prices plummeted as interest rates plummeted for a decade.
Ryan Watkins, a former Mesari analyst who launched a crypto hedge fund this month, sees the current environment as unprecedented. “We are at the mercy of a larger macroeconomic recession that is hurting risky assets across the board,” said the hedge fund manager. “It’s something that crypto never got.”
The crypto market is different again. The collapse of the Terra Stablecoin network took $ 25 billion from Defy and within two weeks of its collapse, the market value dropped by nearly $ 700 billion.
Real progress
Watkins believes that crypto has made real progress in the last four years. “Although [the] The industry is still immature and most of the projects are rubbish, at the moment there are some projects that are suitable for the product market, ”he said. The hedge fund manager added that despite the differences in the macro environment and increasing user attraction, the current crypto recession is much more similar than the end.
And a crypto winter may not be all that bad: investors have a lot more confusion. “There was literally nothing to do with the 2018 beer market,” said The Defy Edge. “DeFi, GameFi, and NFTs didn’t exist yet Many have lost interest in how annoying it was. We now have billions upon billions of lock-ups and many more talented manufacturers than ever before. ”
A report by Electric Capital published in January measured Web3 development activity to an all-time high – but, with a monthly peak of 18,416 active developers, is still small. Electric Capital has seen developers stuck around during the last bear market, attracting more bulls.
Long-term holders with a huge crypto portfolio can only hope that developers will hold on through this beer market as well. Those who are cold may have new tremors.
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