The crypto world has been hit with some pretty strong blows over the last few weeks, so much so that some are asking if this could be the end of crypto as we know it. But what’s next?
In this article, we’ll take a look at what happened in the past and predict where we might be headed in the future. Let’s dive right in.
Intro: Is crypto dead?
The crypto space has been dominated by ups and downs throughout its history. Mainstream media outlets that have spent years slamming digital currencies now claim we are in a bear market, despite BTC showing signs of a strong bounce off of lows as it approaches $6,000. A bull market is considered to be when prices rise consistently over a long period of time. A bear market is when prices fall consistently over a long period of time.
We’ve been here before. In fact, we’ve been here quite a few times before. Some say cryptocurrency markets are beginning to follow a familiar pattern, and that we could be looking at years of sideways trading and declines rather than growth for digital assets. Is crypto dead, and what is next for BTC? Let’s dig into it.
A bear market can last anywhere from 1 year to 5 years or more. A bull market on average lasts between 8-12 months in crypto (excluding outliers). The length of bear/bull cycles has little impact on overall returns as they tend to balance each other out.
Reasons why crypto might be dying
There are a few reasons why crypto might be dying. This can happen when cryptocurrency is at its highest since prices rise quickly and fall just as fast. The crash of cryptocurrency in 2018 may have been due to a lack of decentralization. Since 2018 is where Crypto really took off, we can see how fast it grows too. Although they share some similarities, there are actually three different types of cryptocurrencies: Digital money or electronic cash that only exists electronically; Cryptocurrencies that function as digital money but aren’t issued by a government (they’re decentralized); Cryptocurrencies that exist in physical forms such as Bitcoin Cash or Ether.
New coins and old coins alike may be dying if they lose their decentralization. For example, Ethereum was meant to be a decentralized platform that developers could use to build new applications, but many apps are currently being built on top of it. If there is only one app that needs Ethereum in order to work, then Ethereum has become centralized. If a company builds a really cool piece of software using Ethereum, everyone will want that software as well; thus making them have no choice but to use Ethereum and cutting off other cryptocurrencies from some market share. Another reason why crypto might be dying is due to a lack of awareness. Many people still don’t know about Crypto or cryptocurrency despite it having been around for over 10 years now.
Is crypto dying or not? The short answer is no. As you can see in my analysis, there are many factors at play here, some of which have been around since Crypto first started and some of which are unique to 2018-2019. If a new cryptocurrency dies, it’s likely because it became centralized through for example purchasing power (people buying into their own currency) or its lack of decentralization (if someone creates an algorithm that’s so much better than anything else out there that everyone starts using it instead). It’s also possible for Crypto to live on without actually living. By that, I mean that if we don’t see any major cryptocurrencies being used in daily life then maybe we’ll consider it dead.
What should I do if I invested in crypto?
At some point, whether it’s five years from now or five minutes from now, crypto is going to be what we call a bad asset. If you are holding crypto long-term, then you need to come up with a plan for how you’re going to hold onto those investments if and when they fall in value. The plan could be as simple as I’m going to sit on these and wait for them to rise again (which I don’t recommend) or it could be I’m going to do X. That can include cashing out into fiat currency (dollars), if that’s an option, or buying more cryptocurrency at lower prices (also not recommended). It might also mean taking profits out of your portfolio and using that money elsewhere.
If you invested in crypto using borrowed money, then you have even more to consider when it comes to exiting your investment. In that case, you need to find out what interest rate your loans are charging and figure out if it’s worth taking those funds out of crypto now or waiting until it’s worth more so that you can pay off your debt with a smaller amount of cryptocurrency. If it takes five years for crypto to go back up in value, then that might not be a smart move. But if it goes back up in a month or two (unlikely but possible), then cashing out now may make sense.
It all depends on how much crypto you’re holding, how much debt you have tied to crypto and at what interest rate that debt is charged. If you used credit cards or other types of unsecured loans to invest in crypto, then there’s no getting around it: You’ll owe interest on those investments until they’re paid off. The only way around paying interest is by selling your crypto holdings before they’ve gone up enough in value to cover whatever debts you took on while buying them. That means selling early—and accepting a loss—or waiting patiently for prices to rise again so that you can sell later without taking a loss.
How to recover from this market crash.
The past couple of years has been a wild ride for cryptocurrency. With over 2,000% growth in 2017, 2018 has brought another bear market with prices plummeting 50-80%. Is crypto dead or dying? Will it be worth anything 5 years from now? Maybe not…but as someone who trades, I believe there is still plenty of money to be made if you know how to play out a bear market and make smart decisions on when and where to invest. If you’ve lost all hope in crypto, read on–I’ll tell you how I’m preparing myself for 2022 and beyond. (Spoiler: I don’t plan on holding more than 1/3 of my portfolio in crypto by then.
A lot of people have lost a lot of money over the past year. Those who bought high during 2018 are probably devastated, but if you got into crypto before then and are still holding on, I think there’s still hope. My portfolio took a huge hit in late 2017 and early 2018, but since then I’ve made a decent amount of profit even after selling at market lows. As my portfolio recovers from its losses, here are some steps I’m taking to ensure that I’ll come out way ahead in 2022 (and beyond).
My top tip is to invest only as much as you can lose, and I would say stick to 1/3 of your investment in crypto at most. If you believe that cryptocurrency has the potential over the long term, it’s smarter to be invested across several projects and holdings instead of putting all your eggs in one basket. For example, even though I think a lot of altcoins have no future, some of them are doing well now and will continue to do so for years to come (for example, Verge). However, these investments are for pure speculation–I don’t buy them because I think they’ll moon but just because they’re going up right now and I want a slice of those gains. In other words: Only use the money you can afford to lose when speculating on Altcoins.
Cryptocurrency is a very young market. Many of these cryptocurrencies are pre-product, pre-vision, and pre-believers. To say that cryptocurrency is dead in 2018 is to ignore where we were in 1995 when Amazon first launched. My prediction is that there will be new cryptocurrencies launching every day for at least another decade. I also predict that many of them will fail because it takes a lot of work to make something great. However, if you want to succeed as an entrepreneur or investor, never give up on what you believe in (or buy). I know many crypto lovers who stopped buying back in December 2017 but they told me they had no regrets since Bitcoin has tripled since then anyways.
It’s important to remember that cryptocurrencies aren’t inherently good or bad. They are technology, which means they’re neither moral nor immoral. Technology can be used for amazing things that improve society or it can be used to divide us and manipulate us. The entrepreneurs of today will develop technologies that bring out our best qualities as a species or it’ll turn us into a dystopia where we live in an Orwellian police state. It all depends on how we use our imagination and creativity today, right now. So buy crypto, love crypto, mine crypto, but more importantly create something so bright and beautiful with cryptocurrency than you would ever consider putting fiat currency behind it!