Crypto market. Could it be worse?

25 May 2022, 16:01 | Finance and Banking 
фото с Зеркало недели

The probability of worsening the situation on the crypto market is high. Firstly, it has never been a predictable market, like the currency or stock market, for example.. Secondly, since last year, the binding and interest of the United States in the crypto industry has been obvious, which, under various pretexts, repels users from China and Russia.. Thirdly, during the period of redistribution of the world political arena, users will leave the highly speculative platform for a more calm one.. All this is sufficient reason to expect a decrease in trading volume, exit of players from the market, a fall in prices for cryptocurrencies and a reduction in crypto projects in general.. It turns out that the reduction in the number of bitcoins in the world is not a reason for the growth of its value, as expected. And this once again gives us a landmark that this is an unreliable speculative arena, where it is easier to lose money than to earn.

Separately, we note that the European Central Bank already says that the Russians are using cryptocurrencies to circumvent sanctions.. Yes, Russian individuals simply use cryptocurrency, like citizens of any other country. Economic instability and sanctions pressure provoke businessmen and citizens with significant savings to withdraw money from Russia. At the same time, everywhere there is an opportunity to turn to specialized or private conductors that convert rubles into bitcoins or other cryptocurrencies, so you should not be surprised at the desire of people to withdraw their money to another country.. The weekly value of rubles convertible into bitcoin was about $28 million after the start of the war in Ukraine.. USA compared to approximately 14 million in mid-February. That's 100 percent growth. The ECB's concerns, as well as its threats to monitor the cryptocurrency market more closely to make it impossible to circumvent sanctions, are understandable..

But on a global scale, cryptocurrencies-convertible rubles are still a tiny percentage of the market.. According to cryptocurrency data provider Kaiko, between $20 billion and $40 billion is spent weekly on bitcoin.. Thus, the bitcoin-ruble trade is less than 0.14% of the total. Such trading volumes do not affect the market.

Regarding whether general restrictions on the crypto market will provoke the desire of European officials to block this way of circumventing sanctions, we note that European officials now have no right to regulate the crypto market. Therefore, they cannot block the actions of people of any nationality in this arena.. But the very desire of governments to regulate the crypto industry in order to stop ways of circumventing sanctions is a powerful signal for the market, which can provoke an even greater decrease in interest in it around the world..

And the sanctions themselves do not bypass this market.. Recall that in April 2021, China accounted for 46% of global cryptocurrency mining.. Since April 2019, the share has decreased by 30%. After the ban on mining by China and the “outflow” of miners from the country, Russia became the third largest global hub for bitcoin mining. According to the estimates of the Bank of Russia, the volume of operations of Russian citizens in cryptocurrencies could reach $5 billion. in year. After the start of the war in Ukraine, we saw that Binance became part of the blocking for users from the Russian Federation as part of the Western sanctions policy. For many businessmen, this was an additional signal to withdraw money from the crypto industry..

It turns out that the United States has been trying for a long time and developing the crypto market, in order to then inadvertently destroy the multibillion-dollar industry, which employs hundreds of thousands of employees around the world.. We see that now the market capitalization is not growing most often precisely because its environment is speculative, and if there are problems or concerns about the cost of bitcoin, speculators quickly withdraw money to safer assets or simply to cash.. As of mid-May, its market capitalization is already $15 billion.. , although at the end of 2021 it reached 1.2 trillion.

Thinking about the circumstances under which bitcoin could continue to fall to the point of complete depreciation, I believe that only regulation by the United States can be the trigger that will cause the market to disappear.. If America bans bitcoin in particular and cryptocurrencies in general, as they did in China, then we will see rapid sales and prices drop to zero.. But it is impossible to say that this is clearly a realistic scenario.. The reason is that the world is changing very quickly now, so it is extremely difficult to imagine what the ruling elite will be like in the next years and what the global foreign policy will be like..

If we consider the short term, then we turn to the causes of volatility. The factors and events that will become decisive in the near future are as follows: the strengthening of the monetary policy of the US Federal Reserve, the situation around the war in Ukraine, the issue of regulation of the crypto market by America. At the same time, we note that verbal drivers, as it was in 2021, are now of no interest to anyone. The market is changing and the volatility triggers are also different every month. Everyone predicts a new blow to the market, because they see that there are no new players who want to buy cryptocurrency. And the lack of demand from institutional investors is the reason for the growing distrust among ordinary people.

Therefore, we expect a dynamic price drop from the main cryptocurrencies in the coming months.. Bitcoin will fall in price to the level of 20 thousand. Doll. per coin, Ethereum - up to $1200. From time to time we will see a suspension of price falls and attempts to buy this fall, but the weakness of buyers' sentiment in the current environment will continue. Despite the fact that in the American media space every day less and less is said about Ukraine as a factor of political instability in the world, investors are well aware of the global impact of this war and all the associated risks..

Fortunately, if business now uses the crypto market, it is most often for the transfer of funds, and not for speculation or investment.. This is a very important stage for the crypto industry - it is finally becoming a monetary, not a speculative arena.. This is important and is a good signal that in the coming years, prices for Bitcoin, Ethereum and other coins may return to growth.. However, these prospects for the recovery of the crypto market directly depend on the improvement of the global political background in the world..

[votes id\u003d"

Источник: Зеркало недели