Since 2009, Bitcoin and cryptocurrencies altogether have never been out of the news headlines. Cryptocurrencies had a roller coaster ride in market value last year in 2021, with the market witnessing the highest plight and a sudden fall leading to a loss of $2 trillion. Even decentralized Bitcoin, the big daddy of the crypto world, is running at a 70% drop since November 2021, its record high of nearly $69,000. Experts have come ahead with a view that the cryptocurrency market will be bearish for a longer time, similar to something seen in 2017 and 2018.
Despite the falling value of crypto assets, there has been a considerable rise in investment in cryptocurrencies. This shows the positive inclination towards the crypto market.
Cryptocurrencies from 2018 to 2022
History repeats itself, as is said by scholars, and this is what happened with cryptocurrencies in 2017. Bitcoin price had a steep rise in 2017, only to have a sudden slump in 2018. People inclined towards the over-hyped initial offerings which flooded the market, and people invested huge volumes in various crypto ventures shooting up like mushroom heads. However, most of those ventures could never see a silver lining.
However, the last crash in 2021 had different economic factors influencing the cryptocurrency market. Rapid inflation rates compel the central banks and the US Federal Reserve to increase interest rates on investments.
Due to this unpredictable and sudden rise and fall of the market, both Bitcoin and cryptocurrency are often compared to stock markets. Bitcoin, which exhibited one of its worst falls in November 2021; took many lenders and hedge funds off guard leading to an overall crash of the cryptocurrency market. Even the tech-heavy and the second largest stock capital exchange, Nasdaq, exhibited a drop of more than 22%.
Crypto Victims 2021
The crypto market crash took many under its stroke. Three Arrows Capital (3AC), known to be of the most renowned crypto hedge funds; was compelled to enter liquidation due to the crypto market crash. The actual reason was its failure to meet the payments on a loan of 15,250 Bitcoin and USDC worth $350 million. A major investor in Terra 3AC was a voluminous hedge fund venture of approximately $10 billion; which was engaged in leveraged bets on a wide range of crypto tokens; both established and emerging ones like Solana, Ether, Bitcoin, etc. BlockFi and Voyager were counted among other major crypto hedge fund projects that filed for bankruptcy; however, later, s Sam Bankman-Fried the crypto billionaire, funded and saved the ventures.
Recession, crash, bankruptcy, and failed projects were common outcomes of the 2021 crypto market crash. Take, for instance, Crypto.com, one of the most popular crypto exchanges in business, had to lay off almost 400 jobs, counting to approximately 18% of its total workforce,e to overcome losses and cut down on expenses.
Expected Emergence of Defi
However, amongst recession, failed ventures, and market volatility, there is good news in the air. There are a few emerging crypto advancements with the introduction of decentralized autonomous organizations (DAOs) and decentralized finance (Defi). The Network operations expert at ICHI, Bryan Gross shares his opinion that these are “likely to be the highest growth areas of crypto,” claims Bryan Gross. Defi comes with a unique concept of bringing up decentralized financial products that are which has no governmental control. DAO too exhibits a bright and prospective future of becoming the next big internet community. Already Defi has started its legacy with more than $200 billion in deposits in 2021, and in the year 2022; experts expect a higher plight from Defi.
Wrapping it up !!!
Now, while many expect an even bigger slash in 2022 with the crypto market going even down; another group is expecting a fair rise in the market. For example, Professor Carol Alexander from the University of Sussex thinks there could be potential growth in the crypto market with tokens like Polkadot, Cardano, Ethereum, Solana, etc; in 2022 which you can keep an eye on bitcoin buyers. Therefore, you can check out smaller digital tokens and their growth movement this year. Make sure that you thoroughly assess the platform before making the final decision of registering yourself on the platform and starting trading.