We have had a very difficult year for crypto asset hodlers. Bitcoin has fallen by more than 57% so far this year. Ethereum almost 70%. And, as we have told in the past, some crypto projects are going under. However many investors think this is normal in the crypo world.
Big falls in this market are common and have always recovered. Why should there be concern? Regardless of the fact that volatility is dangerous for those who invest in debt, the truth is that many hodlers seem calm. But this time it could be different.
Symptoms that this could be different
The first thing to note is that this time the fall is deeper than normal. Bitcoin has always grown in the long term. For example, throughout its history its price has been above the moving average of the last 200 weeks. But the trend has been broken in June. It is true that on some occasion he has touched this stocking but on this occasion has broken the trend strongly.
It is also significant that keep falling crypto projects. The latest scandal was the closure of 2gethera Spanish project accelerated in the “Lanzadera” incubator of Juan Roig (president of Mercadona), leaving his clients in the lurch.
Another sign that this is going wrong is that some funds invested in crypto are having solvency problems. We are facing a harsh crypto winterit seems, and not a simple correction before the price shoots up again as on previous occasions.
The actual problem
The real reason why all this is happening is that Bitcoin and the rest of the cryptocurrencies are facing, for the first time, a rise in interest rates in general in all advanced economies. In the last decade and a half, central banks have pushed rates to zero and given almost unlimited liquidity to the battered economies.
This has caused investors to move up their particular food chain: the most conservative investors have been a little more daring, and the most daring even more so. Investors have arrived in Bitcoin and other cryptos who surely would never have arrived with such low rates or with markets flooded with money. And that is going to change.
We will see how and how many crypto resist the crypto winter that is coming with investors eager for security and fed up with the falls of all assets (except energy). Bitcoin and Ethereum will surely be there, but the same cannot be said for the rest of the projects. As always, from here we recommend caution with this type of investment, they are always very speculative.