If you’re one of the crypto investors that recently joined the crypto industry, you might wonder, “Is crypto dead? When will the crypto market recover? What’s with these crypto prices?”
These are very common questions. Since 2013, many crypto projects failed to deliver, and the price of their cryptocurrency plummeted.
So first of all, let’s answer the most important question.
Is Crypto dead?
The crypto market is in a bear market. A bear market is a period when cryptocurrencies decline in price, with high volatility in the markets.
A cryptocurrency can decrease 20-30% in a day, the same as in a bull market increases 20-30% in a day. That’s why crypto trading can be a very profitable thing.
The industry is now filled with uncertainty, especially after Ftx’s collapse.
The crypto community is waiting for a recovery, but the crypto winter is still here, and Bitcoin and other cryptocurrencies are affected.
The total market cap of the cryptocurrency market was over 3 Trillion dollars at the top value. The crash made the industry lose over 2 Trillion dollars in one year.
This sounds like a lot of money, but compared to stocks – it’s not so much.
7 Trillion dollars were lost in the stock market by Americans in 2022, in an industry much safer, with more steady revenue, and where frauds do not happen that often as in crypto.
The FTX bankruptcy – How it affected the crypto industry
FTX bankruptcy was the black swan of the crypto market in 2022. More than a million users were affected by the FTX collapse, and many investors lost everything in early November.
And FTX wasn’t the only one.
3 Arrows Capital was one of the big funds that were wiped out. With over 10 Billion in assets, 3AC was one of the companies that leveraged their positions too much and failed to deliver.
Celsius fell in 2022 as well. The company over-leveraged its positions to increase revenue.
BlockFi went bankrupt as well due to having funds on FTX.
Voyager, Hodlnaut, Core Scientific, and Zipmex were other platforms that turned out to be a fraud.
The downfall of so many companies affected the cryptocurrency markets overall. And it’s not the first time this happened.
There will be a long period until the digital assets will recover, and some will never recover at all.
FTX was compared to Enron when speaking of the amount of wealth lost.
Even with a lot of fees made from trading, with many huge backers and huge investments from the start – the poor management combined with the beginning of the bear market destroyed this cryptocurrency exchange and the trust in the sector.
Many of the users will probably never use a new trading platform again. Governments are asking for regulations. The money users lost was probably everything for some, and that’s heartbreaking.
FTX was a sad story for the crypto space that started a crypto crash like no other. We shouldn’t put this behind us. We should learn from it and understand not to put everything on a single platform.
Other Factors That Affected The Crypto Market
2022 was a hard year. A year in which inflation skyrocketed, and the global economy took a hit. Almost everyone in the world felt the hit in their investing portfolio.
Traditional assets saw an increase in the number of transactions, as stocks are less volatile than digital currency. But even stocks saw a 7 Trillion collapse in their total market cap.
Early-stage startups struggle to raise funds, as investors are much more careful when investing.
And besides those, a new war started in the world right as January ended. Investing is not so easy when you have other things to worry about – such as how to survive.
It’s a hard period for the crypto market, for the users, for the investors, and for any portfolio.
If the US government doesn’t stop the inflation, we might see the value of stocks or crypto projects decrease even more.
And a crypto recovery is also set by a stocks boom when everyone on wall street wants a piece of the pie.
10 Reasons Why Crypto is Not Dead – Crypto assets are here to stay.
1. Users are still here
The users that survived the past crypto winters are still here. They may keep quiet, they may be accumulating more cryptocurrency, but they’re still here.
2. Blockchain technology is here to stay
The crypto market may go up or down, but the blockchain won’t be replaced too soon. It’s a technology that has a massive use case, and it will have an important role in crafting the future.
3. New things appear in each cycle
The 2017 cycle was the ICO era. 2020-2022 was the DeFi Summer & NFT craze period. What’s next? We don’t know, but every time a cycle starts, some new thing appears in the crypto market.
4. Utility is increasing
More and more projects realized that they needed to offer special perks to maintain the attention of their fan base. Could you earn a special APR by holding two cryptocurrencies that didn’t have staking in 2017? No. Now there are DeFi farms.
5. Less major hacks compared to the years before
Indeed, 2022 was the year of crypto platforms going bankrupt.
But let’s look at the bright side – major hacks decreased drastically.
7. Your government surely knows about crypto now
Two or three years ago – governments barely heard about Bitcoin and the whole market of cryptocurrencies around it. But now? They sure do know about it, and they may have a plan to regulate it, let it as it is, or restrict it.
7. More revenue
After the Uniswap success, more and more decentralized exchanges appeared. Or lending platforms. Or SaaS. And even fun and educational tools such as marketcapof.
The point is there are a lot of businesses in crypto that focus on getting more revenue rather than building a cryptocurrency and making money by selling it to other people.
8. Investors see crypto different now
Back in the old days of Bitcoin, investors wouldn’t touch it due to the price volatility. But now? Almost all investors have a bit of their savings in the cryptocurrency market.
Almost all assets are less volatile than crypto, so high-risk investors are willing to take a bet now, hoping the future price will be better.
9. It’s way easier to invest
In the past, it took a lot of work to acquire cryptocurrency. You’d need to create an account on a platform, pass the KYC, make a bank deposit, and hope your bank won’t stop it.
But now? You can buy crypto with a prepaid card, send them to your paper wallet, and buy them from a crypto ATM (which has high fees).
10. The price is cheap now
On the opposite of the ‘crypto dead’ perspective, some users are now buying cryptocurrency. A DCA on the top cryptocurrencies turned out to be a smart bet in 2018-2019.
Will history repeat again in the future bull run? We don’t know. But I’m pretty sure that the price of your favorite crypto is at a nice discount. If you want to invest or not that’s up to you.
How to survive the crypto winter – 10 tips for new users
There are a few rules that you need to respect to survive this crypto winter period in the market.
1. Due your own diligence on any new platform
You can check the web for reviews, verify if they had any hacks in the past, see their Proof of Reserves, check the team, and do everything you can. Don’t deposit a dollar if it seems shady.
2. Stick to Bitcoin
If you want to invest in this period, you’re better with safer cryptocurrencies such as Bitcoin or Ethereum. The fundamentals haven’t changed, and just because an exchange failed, that doesn’t mean it’s the end of bitcoin. After all, Bitcoin survived the MtGox hack.
3. Lower your trading volume
If you’re used to trading daily on your favorite exchange, you might need to lower that amount. It’s better to invest in Bitcoin or Ethereum than to try and make up your losses using high leverage (unless you have some auto trading API).
4. Search for promising projects
Search for projects that have a decent revenue. A major advantage that they have is that they’re not dependent on the value of their crypto. Crypto projects with many users and strong fundamentals are what you should be looking for.
5. Diversify your investments
Another important factor is to diversify your investments. I know I’ve said that you should stick to Bitcoin – but it’s worth having other investments besides the crypto market.
6. Remember that everything’s volatile
Ethereum had a moment when it went under $1,000 in 2022. If you had bought ETH then, you’d have a good profit now. But you’d be at a loss if you bought it at $4,500.
You cannot control the price, but you can control when you buy. A good DCA strategy can bring a decent profit in the next bull run.
7. Don’t fall for a big interest rate
If a cryptocurrency has a high-interest rate, it’s probably a scam. Try to stay away from those and keep a long-term mindset.
If you’re interested, however, in staking some cryptocurrency, here are some profitable staking coins.
8. Keep an eye for the market sentiment
Trading firms, crypto enthusiasts, and professional traders check the market sentiment for a general perspective.
You know the bull market is starting when the market sentiment turns green.
9. Don’t believe other users
In the crypto industry, it’s very important to ignore 99% of the noise.
Most of the users ‘shill’ different crypto assets so others would buy them, therefore increasing their price.
Ignore the noise and stick to a project with a use case, a good team, a roadmap, and so on. Users will come there.
10. Don’t invest more than you can afford to lose
I’m sure you’ve heard about this more than 10 times. But that’s the rule number one in crypto.
If you’re ever asking what could go wrong, remember the FTX story.
We do hope you liked our tips and tricks on how to survive this period.
While we do speak from our own experience, it’s important to remember that none of the information above is financial advice, and you should do your own due diligence or consult a financial advisor.