Cryptocurrencies had a rough start to the year in 2022, but for a time it seemed many top digital assets were making their way out of the crypto winter.
Near the end of March, Bitcoin and Ether, the two top cryptocurrencies by market cap, were notching highs not seen since early January.
But now progress appears to have stalled. Cryptocurrencies’ total market cap has, once again, dipped below $2 trillion, and Bitcoin is struggling to find support at $40,000. The world’s most popular digital asset was down roughly 40% from its November 2021 high of $67,582 on Friday.
As a result, sentiment about the crypto market is starting to take a turn for the worst. The crypto fear and greed index, a popular indicator of the mood of crypto investors created by the crypto analytics website Alternative.me, slipped into the “extreme fear” range this week, falling sharply from last week’s reading of 37 to just 22 on Friday.
The index, which is widely followed in the crypto community, produces a reading between one and 100. Higher readings indicate greed has taken over the market and buyers are plentiful, while lower readings show investors are fearful and sellers are out in force.
Since the end of March, the index has seen a dramatic drop from its 2022 record high “greed” reading of 60. And top cryptocurrency experts like Arthur Hayes, the cofounder of crypto trading platform BitMEX, have argued more downside could be ahead.
“There are many crypto market pundits who believe the worst is over,” Hayes wrote in a blog post on April 10, announcing his prediction. “I believe they ignore the inconvenient truth.”
Hayes said Bitcoin may drop 25% to just $30,000 per coin by June, and Ether is likely to follow suit, falling over 16% to $2,500. The downtrodden forecast comes as cryptocurrencies are increasingly correlated to the movements of tech stocks, which have taken a hit as a result of the Federal Reserve’s plan to aggressively raise interest rates this year to combat inflation. Sinking global growth and less accommodative central banks will weigh on tech stocks, and in turn, crypto, Hayes said.
But not everyone is convinced the market will continue its downward slide. Antoni Trenchev, the CEO of crypto lending firm Nexo, is predicting Bitcoin will surge to $100,000 over the next 12 months as crypto “whales” like Do Kwon, the cofounder of the crypto firm Terra Labs, continue to buy billions of dollars of the digital asset. Kwon has argued Bitcoin could be the future worldwide “reserve” currency.
And Cathie Wood, the CEO and founder of ARK Invest, is even more bullish. Wood told a packed audience at the Bitcoin 2022 Miami conference last week that she sees the world’s most popular cryptocurrency topping $1 million sometime between 2026 and 2030 as institutional investors rush into the crypto market.
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