Did you know that the 10th most valuable cryptocurrency is down over 50% from its all-time high? You can let the dips freak you out, or you can buy. But the truth is, the whole cryptocurrency hype seems to be gone and getting bored. We’re feeling a little déjà vu today. We don’t know about you, but all these recent headlines have the distinct feeling of Deja Crypto. Let’s see what happened exactly!

Forget about Bitcoin: Ethereum and Litecoin are where they’re at

In the crypto-asset market, which is largely dominated by Bitcoin, Ethereum, and a handful of other coins, joke coins named after Elon Musk’s pets are gaining popularity. (Not really.)

Many people are looking at Ethereum and Litecoin as better alternatives to Bitcoin because they’re cheaper and faster to use. You can buy an entire Ether coin for around $260 — significantly cheaper than an entire Bitcoin (which goes for more than $28,000).

The crypto exchange Coinbase was excited to get listed on the New York Stock Exchange. The CEO described this event as a monumental milestone for investors and the entire crypto space.

The stock has been a total dud since its inception. Investors who got in early on the tech bubble were already down 25% before the calendar turned to 2022. After a truly grim week of dismal earnings and an apology from CEO of Coinbase Brian Armstrong following a disclosure flub, shares of the company are now down 80% since their opening price when they debuted.

Bitcoin has been through its worst week in a year and is now worth less than $30,000, down from a high of nearly $69,000 a year ago. That’s bad news for investors who bought into the cryptocurrency craze. But it also has some benefits for investors who’re interested in investing in other digital currencies.

Regulatory Pressure

There’s also some pressure on crypto coming from regulators around the world. This year has seen increasing scrutiny of initial coin offerings (ICOs), with several countries banning them altogether or imposing strict rules on how they can be carried out.

China has cracked down on cryptocurrency exchanges within its borders as well as ICOs themselves; South Korea followed suit last week by banning anonymous trading accounts and requiring real-name bank accounts for traders who want to withdraw their funds from exchanges.

A Meltdown in China

In China, local regulators have banned cryptocurrency trading platforms from accepting deposits and increased scrutiny on exchanges, rattling markets. Then there was the SEC’s decision to postpone its decision on a bitcoin ETF until Feb. 27, 2019, which led to more selling pressure.

And finally, Bitfinex, one of the biggest cryptocurrency exchanges in the world, announced that it’d be shuttering its services in the U.S., citing regulatory uncertainty and price manipulation concerns as reasons for its decision.

The Shake-Out Wasn’t Unexpected

Many analysts predicted that the crypto market would undergo a shake-out as a result of its rapid growth and volatility. For example, Cypherpunk Vinay Gupta said in October last year that he expected the crypto market to go through a “dramatic shake-out” in 2019 due to regulatory pressures, changing consumer behavior, and slow adoption by institutional investors.

Government Intervention

In December 2017, when bitcoin reached its all-time high of $19,000 per coin, governments across the world began taking action against cryptocurrencies because they were afraid that people were using them as an alternative currency instead of fiat currencies issued by governments. Since then, many countries have banned trading or mining altogether, while others have put strict regulations on exchanges operating within their borders.

These regulations make it difficult for exchanges to operate freely without being accused of doing something illegal at any given moment.

One of the biggest challenges facing the cryptocurrency market is regulatory uncertainty. With governments around the world still figuring out how to regulate cryptocurrencies, there is no guarantee that regulations will be favorable or even exist. This creates an environment where investors can’t rely on existing laws to protect their investments or mitigate losses if things go wrong.

The lack of regulations also makes it difficult for businesses to operate and grow within a legal framework that protects them from fraud or theft by consumers or other businesses in their field. This hurts everyone involved because it slows down innovation and prevents new companies from entering markets they could otherwise disrupt with their innovative solutions.

Exchange Hacks

Cryptocurrencies are stored on exchanges, and when these exchanges are hacked, it can damage investor confidence in the entire space. This happened in early 2019 when Binance was hacked, but it does not just exchange that suffers from hacks.

In January 2019, a hacker stole $7 million worth of Ethereum from Coincheck, which resulted in a drop in the price of ETH by 20%.

Bad Press

The first reason is the bad press that cryptocurrencies have been getting lately. The U.S. Securities and Exchange Commission (SEC) recently ruled that Bitcoin isn’t a security, which should help to improve the perception of cryptocurrencies in general.

However, this was only after a lot of negative attention had already been focused on crypto due to issues like Facebook’s Libra coin and the recent Facebook hack.

Price Manipulation

Another reason why crypto has crashed in 2022 is that price manipulation has been rampant in the market since its inception.

In fact, many people believe that Bitcoin prices are manipulated by whales who control large amounts of coins and use their power to move markets at will. This kind of behavior has been going on for years now, but it has become more obvious as regulatory bodies crack down on fraudulent activities within the space.

The Bear Market Won’t Last Forever

The cryptocurrency market is known for its volatility and extreme price swings. While this isn’t something that can be changed overnight, it’s important to remember that the bear market won’t last forever.

According to experts, there is a good chance that we’ll see a reversal at some point in the near future — perhaps even next month. The only thing we need to do is be patient and wait for the right opportunity to enter back into the game.

Many investors have sold out of their positions prematurely because they thought that their investments were going down forever — but this wasn’t true at all! There were plenty of opportunities for those who waited long enough, so there is no reason why it shouldn’t happen again with another asset class or sector in 2020 or 2021 (or even 2022).

A Lot of FUD (Fear, Uncertainty, & Doubt) 

The first FUD is that many people fear losing their money and start selling their crypto assets to get out of the market before it crashes completely. These people think they’re going to lose all their money if they don’t sell now, so they sell their assets to minimize their losses in case of an imminent crash.

The second FUD is that there’s a lot of Uncertainty going around about cryptocurrencies and blockchain technology, which has caused many investors to sell off their assets and take profits. This isn’t necessarily a bad thing, as it means that these investors have made enough money from investing in cryptocurrencies and now want to cash out some of their profits so they can spend them on other things.

The third FUD is that many institutional investors Doubt whether it’s the right time to enter the market or not, waiting to make big investments in blockchain technology companies and cryptocurrencies.

A lot of these firms have been waiting for the market to go down before they make any moves into the space because they want to get in at low prices with high potential return rates if everything goes well.

Valuations Are Back in Line with Fundamentals

The biggest winners in this bear market were not necessarily cryptocurrencies or tokens but rather companies who were able to raise funds at higher valuations than they could during bull cycles. This was especially apparent during last year’s boom when so many projects raised capital at astronomical valuations without any real product-market fit or users or revenue streams.

Now that those secret unicorns no longer exist, we’re seeing valuation levels return to normal for most projects and companies, which means investors will be able to make better decisions about where to allocate their capital going forward.

Some New Institutional Investors Enter the Space

One of the reasons institutional investors haven’t invested in cryptos yet is that they see them as too risky due to the lack of transparency and regulations in the space.

With regulators starting to impose stricter rules on exchanges and ICOs, this will encourage institutional investors to enter the space with confidence that their investments are secure and safe from scams or hacks that may happen from time to time (which happens on Wall Street every day).

The SEC’s Decision on Bitcoin ETFs

Bitcoin ETFs have been in the news recently, but there are still no clear answers as to when they’ll be approved by the SEC. A Bitcoin ETF would allow institutional investors to invest in cryptocurrency without having to buy them directly from exchanges or other third parties, which could lead to a more mainstream interest in bitcoin and other coins. But if these applications are rejected again (as some expect), this could cause a dip in prices as investors lose confidence that there’ll ever be an ETF available for purchase.

That’s a wrap for this blog. As always, we’d appreciate your feedback and would be happy to discuss your thoughts in the comment section below.