2022 has been a turbulent year for cryptocurrencies. Bitcoin became cheaper by 60%, and crypto-exchanges with enviable regularity shared news either about employee layoffs or bankruptcies. Will luck return to those who invest in tokens? Does NFT have a future? And what is happening in the world of cryptocurrencies now in general?
Photo: Art Rachen / Unsplash
Is 2022 the worst year for crypto?
Alexander Teslov,
crypto investor and investment mentor
While people far from digital assets read about the next collapse of crypto exchanges and predict the end of the era of cryptocurrencies, experts in this field are not so categorical. Crypto investor and investment mentor Alexander Teslov immediately notes that 2022 is certainly not the worst year. For example, it was 2015. Yes, and 2018-2019 turned out to be so-so, our interlocutor says:
– Here, rather, the mass effect works, because with each cycle of blockchain development, more and more people are drawn into this industry. But if you look at how the same mining developed in our country, then in 2015 there was a complete “golyak”, the equipment was turned off. Now there are various interesting projects that allow you to mine even in a plus. In general, the past year has become a natural cycle of falling cryptocurrency prices.
Alexander explains that the market turned out to be very “overheated”, and it was natural that everything would fall, since the growth phase was delayed back in 2021. As a result, the “bearish” phase turned out to be longer than usual. And the collapse of FTX and other high-profile stories from the news are a consequence of more global fundamental processes.
Vasily Kulesh,
Whitebird service representative
A similar opinion is held by Vasily Kulesh, a representative of the service for the purchase and sale of cryptocurrencies in the EAEU countries Whitebird. The expert is sure that now there is a redistribution of spheres of influence in the global economy, and the situation with cryptocurrencies is part of a large economic and geopolitical process.
“Last year was difficult, but the crypto economy is already experiencing the fifth crisis since the creation of bitcoin in 2009,” emphasizes Vasily. – And I would not talk about any total consequences. Over the 14 years of the existence of blockchain technologies and cryptocurrencies, a certain degree of stability has formed.
What will happen next?
Photo: Nimisha Mekala / Unsplash
According to Alexander Teslov, the current year will become a phase of accumulation. The expert does not expect cryptocurrencies to rise sharply, but the bottom of their value is already somewhere nearby:
– It is likely that we will still go for updating the lowest values. But I don’t like forecasts, a much more reliable tool is strategies. Every day someone asks when bitcoin will be worth a million and stuff like that. It’s just that the question is inherently wrong. In order for an ordinary person to be successful in finance, investment, and capital growth, he needs not forecasts, but a strategy. Most often, it is not there: everyone just wants to get rich right now, or better, yesterday, while doing nothing. No matter how harsh it may sound, forecasts are sought after by greedy and inexperienced investors.
Experts are sure of one thing for sure: the sphere needs universal rules of the game in order to reduce the number of scammers. In the meantime, with each cycle of the life of cryptocurrencies, there are more and more dishonest market participants.
“The negative side of bitcoin and cryptocurrencies is that the topic is quite difficult to understand for an ordinary user,” Alexander explains. – As a result, quite educated and smart people get into scams, pyramids and the like, who, perhaps, simply did not have enough time to figure out the issue, and the lack of financial and investment experience also affects.
Our interlocutor draws an analogy with Forex, where at first there was the same story, but as soon as regulated sites appeared in the USA, there were fewer scammers.
Vasily Kulesh draws attention to another important point: the crypto economy does not live separately from the traditional one, and crypto assets can be called the most risky asset class. During the period of turbulence, it is from risky assets that they are the first to exit. But due to the fact that cryptocurrency assets have a number of fundamental features compared to traditional ones, they can start to rise first, the specialist explains:
– The most used financial messaging system in the world is SWIFT, at the moment it is malfunctioning, and with some countries it does not work at all. If we talk about blockchain technologies and bitcoin specifically, hypothetically, then any person can send any amount to anywhere in the world in 10 minutes – so much time is needed for all stages of the operation.
If we talk about the use of decentralized blockchain networks and cryptocurrencies, the advantage is that no one alone can influence the course and history of transactions, change the information in the blockchain. In a decentralized world, the principle that someone is censored because of an inappropriate passport, name or other data does not work, verification is carried out differently. In addition, most blockchain networks operate 365/24/7 and without geographical references.
In any case, says Vasily Kulesh, blockchain technologies and cryptocurrencies will be used in the future, but which and in what capacity is an open question. Bitcoin and ether, if they leave, then certainly the last.
According to open sources, there are more than 20 thousand cryptocurrencies, and 99% of them have no prospects.
“I think that already in 2023 it is worth waiting for the arrival of regulators, which will lead to the fall and exit from the market of most crypto projects, since they will not meet the requirements,” the expert adds.
What to expect from NFT
Photo: Freepik
It seems that we have begun to gradually forget about non-fungible tokens. They appear less and less in the news and attract attention only in the context of image companies from brands. Alexander Teslov agrees that the surge of interest in NFTs is a story about fashion and hype. At the same time, the expert emphasizes that the technology is actually cool, but there are nuances:
— The same NFT sneakers. The audience was offered a beautiful wrapper: go and you will be dripping money. But nothing that you need to pay for it right away? In fact, the authors of the project from the same money that users contributed at the beginning, and paid, and every day less and less. It is clear that the creators of this pyramid turned out to be in the black: a classic of the laws of the market, when only a few earn and lose millions. In addition, there are many stories with NFT when money was simply laundered. Let’s say some drug lord creates a meaningless photograph for these purposes and sells it for $1 million. As a result, he received something like an official income.
Vasily Kulesh also notes that a token containing a certain graphic object is really a hype, and not even 2022, but 2021. Even HarperCollins, the publishers of the English explanatory dictionary, have chosen NFT as the word of 2021. And this story came to an end, as 99.9% of the people who bought NFTs at that time did not look at the artistic value of the tokens, but expected huge profits.
Investments in cryptocurrency: who is ready to take risks
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Investors in various areas have recently been in no hurry to part with their money, and the cryptocurrency market is no exception. Inactively investing in it now both in Belarus and around the world.
“There is such a picture: bitcoin at $69,000, and there is a queue behind it,” says Alexander Teslov. – Then bitcoin becomes $30 thousand – two people remain in the queue, and when $20 thousand – no one. Here is the third situation. Although the time has come when you can buy bitcoin and other worthwhile crypto projects.
In turn, Vasily Kulesh notes that there is still interest in investing in cryptocurrency. For example, the organization BlackRock, which accounts for the majority of the pension savings of citizens of the Western world, launched an exchange-traded fund (ETF) with a focus on blockchain and crypto companies.
Belarus, the expert believes, against the backdrop of the emerging geopolitical situation, has the potential to become a blockchain and fintech hub. As soon as the crypto-economy began to be regulated in 2018, Belarus followed the path of creating a well-developed infrastructure with a focus on strategic goals.
While Goldman Sachs analysts are promoting the advantages of gold over bitcoin in the long term, experts in the crypto industry are ready to argue that cryptocurrencies and blockchain technologies have no less significant advantages over the precious metal.
“Yes, bitcoins are easier to steal through the same hacker attack than physically — a gold bar from a bank vault,” suggests Alexander Teslov. – It also affects the fact that the older generation owns gold. I see from my clients that people start investing in it only after 30 years. And gold is not a replacement for bitcoin, but rather an additional cool tool in an investment portfolio. As an investor with 10 years of experience, I can say that diversification is our everything, and it should be based on a strategy.
“The volume of gold obligations issued by regulated financial institutions is larger than the amount of gold on the planet,” adds Vasily Kulesh. — There are such studies. And if tomorrow all the investors come and ask for their gold back, it will be impossible to do so. What then is the bigger bubble? A gold bond or a bitcoin that is limited to 21 million units and easy to verify?
As for the story with the comic Dogecoin currency, here, according to Alexander Teslov, “the hype on the hype created by the hype personality – Elon Musk”:
— In fact, the shares of his Tesla company were inflated in the same way as the Dogecoin price. First, they practiced on securities, and then on meme-currency. Initially, it didn’t make any economic sense, just thanks to Musk’s regular mention on Twitter, Dogecoin grew exponentially. But this is purely manipulative growth. And there will be more such projects.
Experts in the crypto industry believe that point investments in an attempt to find a token that will grow hundreds of thousands of times, as a rule, end up in a loss. The same Solana: funds bought a coin for a few cents, as a result, it grew to $200, but then collapsed by 90%.
“Theoretically, it is possible to get into rapidly taking off projects, but if you multiply these efforts by the time spent, analytics, fundamental research, then it’s easier to buy bitcoins wisely according to the strategy,” Alexander Teslov believes.
And Vasily Kulesh advises to study the industry now, because when the next “bullish” cycle comes and cryptocurrencies are once again talked about from every iron, it will be too late to do it.
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