- Most cryptocurrency values have recently plummeted, leading some to believe the bubble has burst.
- As the money runs out, cryptocurrency businesses are laying off thousands of employees.
- Can the Bitcoin sector recover like it has in the past? The only way to know is to wait and see.
It’s challenging to write about Bitcoin these days. There’s a strong probability that certain portions of an article will have changed drastically in the preceding 24 or 48 hours by the time it’s researched, written, edited, and published. The cryptocurrency roller coaster is moving at breakneck speed. Even individuals with a genuine interest in the market may need helping to keep up.
Bitcoin’s price reached an all-time high of under USD 70,000 per coin six months ago, in November 2021. A year prior, the cost was around $15,000. With such rapid development, many early investors saw their investments quadruple or treble (or more). Yes, the buzz around cryptocurrencies was at an all-time high. Online exchanges were springing up everywhere, enticing you to purchase Bitcoin, Ethereum, Lite coin, or Dogecoin. Matt Damon starred in Crypto.com Super Bowl commercials, assuring you that “fortune Favours the brave.”
Honestly, you’d have to live under a rock not to have had crypto-something rammed in your face.
The Bitcoin Recession
Bitcoin and other cryptocurrencies have always had erratic prices. It has previously declined sharply, only to climb again. However, most cryptocurrency values have been in free fall from the end of 2021 and the beginning of 2022 (so far). The price of Bitcoin is currently around twenty thousand dollars per coin, and excitement is waning quickly. So, what precisely occurred?
Like any new product or technology, the investment market has a lot to learn about cryptocurrencies. Unfortunately, many people have invested millions of dollars in digital currencies and have yet to learn all the dangers. Yes, some folks got in early, sold around the top, and earned a fortune. Others, sadly, got into the unrest. They were promised that Bitcoin would easily reach $100,000 per coin (or Dogecoin would reach $1.00 per coin) and that all of their cryptocurrency assets would go “TO THE MOON!!11!”
Many folks have significant losses and need help figuring out what to do next. Will the prices finally recover, allowing them to break even? Can they cut their losses and buy currently while the value remains? Or will the crypto price crash continue until every last investment remains in the bag?
Concerns About Security
Cryptocurrency is similar to the Wild West of internet investment. The setting is perfect for con artists because there are few laws and restrictions. A recent Federal Trade Commission (FTC) study said that Americans have lost more than $1 billion in cryptocurrency-related scams since the beginning of 2021.
Some invested in enticing “investment opportunities,” only to have their money vanish into cyberspace. Others had their tangible cryptocurrency assets stolen in complex phishing or trading frauds. Nearly $200 million was lost in “romance scams,” in which scammers use dating sites to mislead love-struck mates into donating bitcoin for some fictitious emergency expenditure.
“Crypto has several features that make it appealing to scammers,” according to the FTC investigation. “There is no bank or other centrally located power to flag suspicious transactions and try to prevent fraud from occurring.” Crypto transactions cannot be reversed; once the money is gone, it cannot be recovered. And most people still don’t understand how crypto works.”
Privacy Issues
Privacy was supposed to be one of the most appealing aspects of adopting cryptocurrencies. It was completely uncontrolled. It was distributed. You could spend the money as you chose without fear of the government interfering. Bitcoin was a dream come true for privacy advocates. Except that it wasn’t any of those things.
Recent research focuses on Bitcoin’s privacy, decentralization, and anonymity. The findings were unsettling, as it discovered the capacity to “de-anonymize” Bitcoin users in some circumstances. They also stated that law enforcement organizations may (and presumably do) exploit cryptocurrency transactions in criminal investigations. The report also calls into question that Bitcoin is entirely decentralized, claiming that the entire sector is more akin to a tiny system supported by a small minority of prominent actors.
Bitcoin Governance
There is a rising call for cryptocurrency regulation, particularly in light of recent significant losses by millions of users. Governments are now attempting to figure out how to address this issue. And a group of 60+ politicians isn’t exactly on the leading edge of web3 blockchain technology. So it’s even more complicated than it appears.
The present discussion boils down to the question: is cryptocurrency security, like a stock that can be purchased and sold? Or is it a commodity that can interact with futures contracts? Is it a currency comparable to the US dollar? The Responsible Financial Innovation Act is a bipartisan law presently being introduced. Among other things, it would provide the first valid regulatory framework for Bitcoin in the United States.
Outspoken Critics are bursting the Bubble.
For every Elon Musk tweet urging you to invest in Dogecoin or use your Bitcoin to purchase a Tesla, other notable personalities are dousing the Bitcoin fire. Many prominent financial gurus and ultra-wealthy investors avoid crypto and advise others to do the same.
Warren Buffet, a well-known financier, dismissed investing in Bitcoin. Berkshire Hathaway CEO Warren Buffet famously stated that he would not buy all of the Bitcoin in the world for $25, describing it as “magic” that “doesn’t multiply or produce anything.”
Nassim Taleb, a well-known Wall Street trader and former hedge fund manager, has also changed his mind about Bitcoin. After initially supporting the technology, he sold all of his Bitcoin in 2021, claiming it was too volatile. Bill Gates has recently made news for claiming that cryptocurrencies and NFTs depend on the “bigger fool principle.” Something is only valuable if you can continue to persuade the next person to pay more for it.
Shady business practices
Bitcoin supporters will tell you that Bitcoin is about freedom, privacy, and all. Except that, when times become rough, several prominent crypto exchanges close their doors. Granted, it is generally only a temporary shutdown. However, it is hardly the complete power and independence that Bitcoin proponents boast about.
As the prices of most major cryptocurrencies plunged in June 2022, crypto network Celsius ceased all trade, including withdrawals. The service boasts 1.7 million subscribers, all of whom could do nothing except watch their portfolios dwindle by the minute. Some individuals wondered if they would ever be able to get their money back due to the dodgy language in their official statement and Terms of Use agreement.
Coin flex performed the same thing as Celsius a few weeks later. These crypto exchanges can do anything they want since there is little government control or regulation. Anyone wishing to send them money should be wary of this.
Stable coins Aren’t All That Stable
The cryptocurrency market is quite volatile. That much should be self-evident by now. Someone got the fantastic notion of “what is crypto, but more stable?” at some time. Stable coins were born as a result. In a nutshell, a stable coin is a cryptocurrency whose value is linked to a real-world asset, such as the US dollar or the price of gold. The premise is that they are algorithmically priced to avoid the dizzying peaks and troughs witnessed with Bitcoin and other cryptocurrency.
Except that they don’t function.
Terra USD, one of the most popular stable coins, was touted as “safe,” “stable,” and “fiat-backed” by crypto exchange Binance. For most of 2022, the price per coin remained around USD 1.00 (as anticipated). However, it reached a low point in mid-May and is presently trading at $0.01 per coin. Yes, it lost 99% of its worth in a couple of days.
More than 2,000 investors have filed a lawsuit against Binance, claiming (among other things) deceptive advertising. Luna, Terra USD’s sibling coin, has likewise entirely crashed.
Cryptocurrency companies are laying off thousands of workers.
If the accurate pricing of cryptocurrencies needed to be more to worry about, the underlying sector is also experiencing significant losses. Many big Bitcoin exchanges abruptly cut back on hiring or laying off current employees. Some are even withdrawing previously offered employment offers.
Block Fi, a cryptocurrency lending startup, announced the layoff of 20% of its workforce, or around 170 employees. Crypto com’s CEO made a similar statement, laying off 260 additional employees. Gemini, another corporation, recently laid off 10% of its employees. Coin base, one of the largest bitcoin exchange websites, laid off around 1,100 staff.
The tides have shifted considerably, given that some of these firms have purchased naming rights to major sports stadiums and paid for those giant Super Bowl advertisements last year. Things aren’t looking for so good right now, especially for those who have recently lost their employment.
What Will Happen Next?
Who knows? Bitcoin’s price has progressively climbed in the previous five days, although it remains barely around $21,000 per coin. That’s a long way from the highest price of $68,000. Many crypto advocates encourage consumers to “buy the dip,” expecting prices to increase again. And it’s very feasible they will.
Of course, it’s also possible that prices will never return to where they were. The days of doubling, tripling, or quadrupling your money (or more) in weeks may end. There’s no way of knowing.
When consumers lose interest or become hesitant to acquire cryptocurrency, demand falls. That, in turn, generally pushes down the price. However, this price drop might be the perfect opportunity for many on-the-fence Bitcoin investors.
In conclusion
Every cryptocurrency is a high-risk bet. Prices are too variable to be considered a good investment. Prices are now relatively cheap, making now an excellent moment to enter the market. Prices, on the other hand, may just as quickly continue to fall. No matter how thorough your study is, it just cannot be predicted. If you want to acquire Bitcoin (or other coins), follow this rule: invest only what you’re willing to lose. Your Bitcoin purchases may still yield profits. They might, however, become entirely useless.
