Crypto has had one of the worst months ever, with its signature coin “Bitcoin” dropping to an 18-month low, falling below $23,000 after it tumbled 15% in only 24 hours. Other major coins like Ethereum fell by 17%. The sell-off in crypto comes as a standard investor reaction to the broader macroeconomic trends growing in the background. Indeed, headwinds caused by rising interest rates, inflation, and the broader fear of recession, have placed the riskiest assets like crypto the first on the chopping block. The sell-off may be even worse than that because, unlike the last few weeks which were already brutal for crypto, the most recent drop in price was so quick and volatile, it could point towards a broader and more fundamental mistrust in crypto, and the platforms supporting them. In short, what was already a steep decline has become a full-blown panic sell.
The sell-off was so brutal that many trading platforms froze withdrawals. Moreover, many companies in the space cut jobs, and panicked investors dumped their assets, nose-diving the market cap of crypto below $1 trillion (three times less than its peak in November). Today, there’s even more big news in crypto, with Coinbase, one of the largest centralized exchanges, seeking licenses with various countries in Europe as part of an aggressive expansion in the region. The move comes in light of a potential incoming crypto winter. It is believed that the move will help drive growth amid fears by tapping into international markets.
Could this mark a change in trajectory for crypto overall and could a post-crypto winter world see even more of the digital assets more powerful than ever?
I am not a financial advisor and my comments should never be taken as financial advice. Investments come with risk, so always do your research and analysis beforehand.