Things are not looking good for bitcoin. After being strong throughout the COVID-19 outbreak, the cryptocurrency just sank in a major way. The cryptocurrency had its worst month ever, losing more than 38 percent of its value in June as of Thursday afternoon, CNBC reported. The cryptocurrency lost nearly 58 percent of its value in the second quarter of 2022, wiping out nearly $1.2 trillion in value across the total cryptocurrency market.
One researcher also discovered that Bitcoin does not live up to all of its technical promises. Ether, the world’s second-largest cryptocurrency by market capitalization, also had a rough month, with prices down about 47 percent.
Will the other shoe fall off?
“There is still an aspect of cryptocurrency that we wait to see if another boot goes down, if another entity fails, if the credit chain continues,” Matt Hogan, chief investment officer at Bitwise Asset Management, told CNBC in an interview. . “I think we have to get through the July 4th weekend and get through that quiet period in the market before we build into the second half of the year.”
But why does this happen?
Bank of America analysts on Wednesday pointed to the fact that US consumers are more wary of the cryptocurrency market as a reported 50% drop in the number of active crypto users from its peak of over 1 million users in November 2021 to less than 500,000 in May. Meanwhile, the US Federal Reserve’s two hikes in interest rates to combat rampant inflation did not help matters as it raised fears of a recession.
dumping of risky assets
As investors dump risky assets, bitcoin stocks are among the first to trade. Then there is the breakdown of the stable algorithm terraUSD and sister token luna. The stablecoin was supposed to be pegged to the US dollar and governed by an algorithm and a complex system of burning and minting coins that ultimately failed.
This failure had devastating effects, most notably on cryptocurrency hedge fund Three Arrows Capital, which had exposure to terraUSD. Three Arrows Capital had its own problems that festered, leading to its liquidation.
Is all lost?
In fact, things are not looking good for cryptocurrency. But is all lost? It doesn’t seem like a lot of bitcoin fans are eagerly waiting for another rally and buying into what they see as bargain prices.
“If your time frame is a week, a month, or even a quarter, I think there’s still a lot of volatility,” Hogan added. “If you have a time horizon measured in years, then yes, this is a great opportunity to consider entering the market.”
Will Bitcoin and Other Cryptocurrencies Rebound? Is this the time to buy what is already low or are things only going to get worse? Only time will tell.