With bitcoin bottoming, cryptocurrency’s true potential could be revealed more quickly: blockchain technology itself.
Are crypto dominoes finally beginning to topple? Bitcoin has fallen below the important psychological threshold of $20,000. The other major cryptocurrency, ether, also lost much of its value. Financial analysts are therefore predicting further panic selling on the crypto market.
Now that markets are slipping and inflation is plaguing the global economy, high-risk cryptocurrencies are the first assets to be sold. Contrary to what is often claimed by certain crypto enthusiasts, crypto assets are developing in parallel with traditional stock markets – and all markets are currently under pressure. Because: Central banks around the world increased their interest rates this week to fight inflation.
Crypto crisis follows cluster of crypto glitches
With that, the days of lots of cheap money are over and investors are now becoming even more cautious and avoiding risky assets. This includes crypto assets like bitcoin as well as tech stocks. The setback in the crypto market matches the sell-off in traditional asset markets. The crypto world already has enough of its own homemade problems. The rate hikes come at a time when crypto mishaps are piling up.
Last week, the US company Celsius Network announced that all account movements would be frozen for the time being. This means that private investors can no longer withdraw bitcoins, for example.
Coinbase, the largest cryptocurrency exchange in the US, has also laid off over 1,000 employees. That’s a fifth of his workforce. Just a few months ago, Coinbase, along with other influential crypto companies, went on a marketing course and bought commercials in the Superbowl. The motto back then: Fortune favors the brave.
Opportunity for blockchain technology
Courage is part of every game of chance. For some economists, cryptocurrencies have always been more of a casino than an investment per se. The fact that this system is now suffering can also have advantages for the real economy in the current situation. Now that money is tightening around the world, countries may even benefit from the latest crypto crisis as money and labor are shifted to more useful, productive areas.
And as the crypto dominoes keep falling, perhaps the true potential will emerge sooner: blockchain technology itself. In other words, the digital land register that publicly records all transactions made in a forgery-proof manner.
Although cryptocurrencies made blockchain popular, blockchain technology can be used in various industries, such as logistics, art and medicine. The latest crypto crisis should not obscure the fact that the technology may be really successful somewhere else.