The best period of the cryptocurrency boom seems to be behind us more than halfway through 2022. The streak that generated considerable wealth for many investors has come to a quick end. The prices of Bitcoin and Ethereum are down more than 70% since last November. As a result, fortunes have been lost, jobs have disappeared, and companies are failing during what many in the industry have dubbed another “crypto winter.”
The price of crypto has been declining fast since the Fed indicated that they would be increasing interest rates to try and combat inflation. Like when trading stocks, investors begin to sell their riskier investments when they feel the market is headed in the direction of a recession.
Once the market started to decline, investors decided they would rather put their funds in a real money online casino than take a chance holding onto their tumbling virtual currency, and the huge selloff began.
When Is The Best Time To Buy?
Even though its value is down more than 70%, experts still suggest that Bitcoin is currently an attractive buy. The biggest obstacle for investors is figuring out where the bottom is, while other recent events have also hurt the confidence of potential investors in the crypto market.
For example, in May, one crypto pegged as a ‘stable coin,’ Terra USD, lost more than $40 billion and is now priced at less than a penny after losing almost all of its value.
Most experts feel that Bitcoin and other cryptos are undervalued and will increase again soon. JP Morgan Chase recently valued it at about $38,000, almost twice its current price. Many think the prices of Bitcoin and Ethereum could fall even further and remain there for several months.
Some also say that now is the time to invest in cryptos, but consumers must ensure that all other finances are in order before doing so.
What’s The Risk?
During the Great Depression, the government signed the Banking Act of 1933 into law. This regulation separated investment banking assets from business assets to protect consumers from investments with companies that could potentially gamble away their money.
However, this protection began to lessen in the 1980s, as Congress started deregulating the financial sector to keep its competitive edge against other worldwide financial giants.
Eventually, the markets suffered another crash in 2008, but the US government avoided a disaster as big as the Depression by bailing out the biggest banks and the entire automobile industry.
Nevertheless, millions of citizens were without jobs, and some lost everything. Not one banking executive served any time in jail for destroying the housing market by intentionally giving risky home loans to consumers.
Since crypto has no standards or regulations for risk management, the industry is not required to be transparent like financial institutions. As a result, investors have no idea how their money is being used, and no investments are insured, just like before the crash of 1929.
The crypto market remains unregulated mainly due to the extensive lobbying efforts by industry big shots in Washington, who want the industry to continue without any oversight from the government.
These are some reasons why the US government has been pushing for regulation of the crypto industry as efforts to pass legislation are gaining more traction among lawmakers. The US Treasury Department said in a recent statement that the current turmoil in the crypto market underscores the need for regulation.
Which Crypto Should You Buy?
Investors in crypto need to remember that it’s highly volatile and often unpredictable. Those looking to buy cryptos in the near future must understand that this is normal and shouldn’t panic if prices fall even further before rising again.
Regarding overall investment, buyers should not invest more than 5% of their portfolio in cryptos. According to industry experts, Bitcoin still holds the highest value for investors, followed by Ethereum. They may be volatile in the short term but are expected to increase in value in the next couple of years.