We’re only 2 months into 2023, and Cryptocurrency has already had a rather rough time. Even Bitcoin, the most profitable cryptocurrency just recently dropped below $20,000. While the price fluctuates in that range, it is nowhere near the $40,000+ that it peaked at last year. It was only a few years ago that many people believed cryptocurrency would be irreplaceable. Some even believe that it will one day replace traditional means of currency, but it’s starting to look like that’s far from the case. Cryptocurrency has taken hits across the board, so it is very uncertain of whether or not it will truly stick around.
Why is cryptocurrency doing worse this year?
For those who aren’t following or investing in cryptocurrency, it might be a huge surprise that it’s in the state it is today. 2021 was the best year for cryptocurrency in the history of its existence, so having it fall as much as it has in just 2 years might seem crazy. There are of course many factors that have contributed to this fall, but here are a few of the more notable ones:
Global Stocks Dropping – Similar to cryptocurrency, global stocks have recently gone downhill. The war in Ukraine, inflation, and a number of other factors have caused global stocks to collapse, and this in turn affected the crypto market.
FTX Collapse – Back towards the end of 2022, FTX, one of the largest crypto exchanges at the time also collapsed. This was one of the main contributors to the downward spiral of cryptocurrency. The recent arrest of its founder, Sam Bankman-Fried also led to many feeling uncertain about where cryptocurrency as a whole was going. If such a large exchange could collapse, and its founder be accused of fraud, it’s no wonder that people would have a hard time trusting crypto as a whole.
Rumors – There were recent rumors that went around stating that the SEC would be looking into getting rid of staking cryptocurrency for U.S. retail customers. Staking is the act of locking one’s crypto assets for a period of time in order to support the operation of that specific network’s blockchain. Preventing staking in the U.S. would be a huge hit to cryptocurrency as a whole, so it should be no surprise that it started to go down after this rumor was spread.
Is cryptocurrency done for?
It is very easy to look at the current state of cryptocurrency and be quick to say that it’s going to die out. NFTs, which saw a 97% decline last year use similar technology to cryptocurrency, so it’s easy to compare the two and assume they will meet a similar fate. There is still hope for cryptocurrency, however, as its potential has still not been fully realized. Cryptocurrency might be doing really bad right now, but that could easily change in the near future. Bitcoin reached a low of $16,000 just last year and was able to go back into the $20,000 range, so it could be recovering. With the recent rumors surrounding cryptocurrencies, however, it might not be the best time to invest.
What to expect in the future
In the midst of all of the recent developments surrounding cryptocurrency, it’s safe to say that no one truly knows where things are going with it. One thing for certain, however, is that we will continue to find different ways of using blockchain technology. It’s already widely used, but cryptocurrency and NFTs are some of the more popular examples of its potential. Bitcoin and other cryptocurrencies have already made plenty of people millions, but for every successful cryptocurrency, there are a dozen that end up being scams. Until the certainty of cryptocurrency becomes clearer, the safest thing you can do is avoid investing in it for the time being.