The first half of 2022 was a bloody one for cryptocurrency and the blockchain market. The crypto lending had its fair share of casualties, with at least three major players filing for bankruptcy. Three Arrow Capital, Voyager Digital, and Celsius all went under amid a market-wide deleveraging process that saw billions of dollars wiped out of the industry. Terra’s UST coin de-pegged from the dollar and lost over 90% of its value, while Bitcoin’s price fell below $50,000 for the first time in months.
From $3 trillion market size in 2021 down to $1.1 trillion in the early half of 2022, it seems like the crypto industry is on the verge of another bear market. This time, however, experts are looking at the downturn as a much needed correction after the parabolic price action of the past few months.
The Worst is Behind Crypto Investors
JP Morgan Chase analysts frame crypto and the blockchain market’s recent crash as a consolidation phase that was “healthy and overdue.” They see the market’s current state as a return to sanity after the February price bubble, when Bitcoin surged above $50,000 and Ethereum hit an all-time high of $2,032.
Now that the euphoria has dissipated and prices have come back down to earth, analysts see a more sustainable market with room to grow.
Good News on the Crypto Regulation Front
Aside from JP Morgan’s bullish prediction, there is another reason to be optimistic about crypto in 2022: regulatory progress in several key countries.
In March 2022, USA’s President Joe Biden ordered government agencies to study the “responsible development” of digital assets, including stablecoins. This is a huge step forward from the Trump administration, which often took a hands-off approach to crypto regulation.
In the UK, the government is taking steps to promote the use of blockchain technology and make the country a global “crypto hub.” The UK is already live-testing crypto on some financial market activities, such as trading and settlement.
With more governments taking a proactive approach to regulating crypto, it’s likely that we’ll see more institutional investment in the space. This could provide the boost that the market needs to start climbing again.
What Does the Future Hold for Crypto?
According to this piece by Time, crypto investors may have something big to look forward to. The article cites various experts who believe that Bitcoin could reach $100,000 in a year, and more than that in five short years.
This may seem like an outlandish prediction, but it’s important to remember that BTC’s value today is more than twice what it was just two years ago. Also, dramatic price fluctuations are nothing new for Bitcoin. The most consistent element, though? Bitcoin’s price always goes up in the long run.
So, if you’re feeling bearish about the market right now, remember that this is just a phase. The worst may be behind us, and there are plenty of reasons to be bullish on crypto in the years to come.
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