The crypto market has been on a downward trend season since the beginning of the year. The year 2022 has turned out to be a bear season for the crypto market. The price of Bitcoin had remained below 30K all through the year to attain two years low on November 22 with the price falling to $15,476. The bulls were quick to defend this region pushing the price back above the 16K level.
Many crypto investors have since been curious to know whether this will be the lowest level for Bitcoin in 2022. Has Bitcoin gotten to its lowest level? Is this the right time to hope for crypto recovery? This work has examined these pressing questions.
What Is Cryptocurrency?
Cryptocurrency is no longer a new word in the street today. Over 60% of the adult population in each country must have heard about cryptocurrency in one way or the other. The term cryptocurrency is used to describe the digital form of money built on a Blockchain. One thing remarkable about this form of money is that it is highly decentralized and allows individuals to control their wealth without any external interference.
Why Is The Crypto Market On A Downward Trend?
Crypto investment is an investment package that thrives so much when the economy is booming with lots of money in circulation. Thus, when traders have lots of money in their possessions they tend to invest them in risky assets such as Crypto, Stocks, Commodities, etc.
However, the case has been different since 2022. This is because of the high rate of inflation across the globe which has pushed the central banks to embark on aggressive interest rate hikes for various currencies, especially the major currencies such as: the US dollar, Euro, Pounds, etc.
Consequently, the US Federal reserve has proceeded to raise the interest rate for the US dollar so high up to 4% in November. Hence, investors have been attracted to pull off their investments in Crypto and other risky assets to invest in the US dollar and other strong currencies. This has resulted in a massive fall in the prices of various Cryptocurrencies in the market today.
Added to this, the crash of the second largest crypto exchange known as FTX has further created fears amongst crypto investors, causing many to withdraw their investments in Crypto. This ugly situation has further deterred new investors from coming into the market to buy cryptocurrency.
Can We Expect The Crypto Market To Recover Soon?
One pressing question that investors seek to find an answer to guide them in their investment is: whether the crypto market has gotten to its lowest level for them to fill their bags. Well, it is always good to remember the major factors that have pushed the crypto market into a bear season before answering such questions.
The first is the successive interest rate hikes coming from the Fed almost every month. And next, the FTX crisis. The important question to ask here which will determine whether the market is set to recover again is if the market has absorbed these two factors.
The answer to these questions will come in the negative, as the Fed is yet to give up on their aggressive interest rate hikes. Similarly, investors are yet to recover their lost funds from the crashed FTX exchange.
With these two factors still in place, then it is less likely that the crypto market will recover immediately except when any of two factors is removed from the equation. Probably when, the Fed slows down on the aggressive interest rates and begins an expansionary monetary policy.