When will bitcoin and cryptocurrencies rise again?

Between failures, scams, accusations from regulatory bodies and constantly broken promises, there are many skeptics about the future of bitcoin and similar. However, they have shown that they are able to withstand many shocks

A roller coaster

It was known that the cryptocurrency winter would be long . At the end of each euphoric phase – in which the values ​​of bitcoin, ether and other digital currencies rise impetuously – there follows an inevitable phase of dramatic decline in prices (with drops of up to 70-80%, if not more in the case of the minor cryptocurrencies) and then a long period in which the values ​​fluctuate, even abruptly, to levels much lower than the highs reached previously .

The roller coaster

To understand how long this winter may last (the worst phase of which, according to some analysts , may be over), we can refer to the one experienced following the great crypto-bubble of 2017/18 . The market peaked in January 2018, when the overall values ​​of all cryptocurrencies in circulation reached $800 billion . Almost a year later, in December 2018, the bottom was reached at 110 billion (-86%) .

Investors had to wait three years before seeing a new overall maximum value, reached by the market in November 2021 with the stratospheric figure of 2,700 billion dollars . To get down to what (so far) have been the new minimum levels, we once again had to be patient for a year: in January 2023 the value of 800 billion was reached (-70%), only to then witness a rise that brought today to values ​​around 1,100 billion .

In the same six months, bitcoins went from a minimum of 15 thousand dollars to the current 26 (after reaching 68 thousand in September 2021), while ether went from 1,200 dollars to 1,700 (after exceeding 4,600 in November 2021). So where are we in the cryptocurrency winter? Is the market restarting? If we were to refer exclusively to past trends – always held in high regard by financial analysts -, we could imagine that 2024 is the year of recovery and that within a couple of years we will return to new highs.

The other factors

The precedents, however, are not enough to complete the picture and there are many other factors to take into consideration . First of all, if the 2018 wave was supported by small investors, the 2021 wave was instead made possible by the growing interest of large investment funds , who flocked en masse to these particularly risky assets in a period of great and generalized financial euphoria (even the Nasdaq grew by 50% in 2021).

Now, however, there is a fear that large investors have lost patience and are in no hurry to start betting again on these digital assets with a very high speculative rate. What are the reasons , other than the fact that we find ourselves in a radically different economic framework?

In recent weeks, it certainly isn’t helping that the world’s two main exchanges – Binance and Coinbase , which allow millions of customers to trade cryptocurrencies – have come under heavy scrutiny from the SEC (the US stock exchange regulator , equivalent of our Consob). In particular, the SEC filed 13 charges against Binance , accusing it of mismanaging its customers’ funds and a series of other classic (alleged) financial crimes; while Coinbase is accused of not being in compliance with the type of assets it allows you to purchase (these are complex issues, which you can find illustrated in detail in this Bloomberg article ).

Not that these accusations have particularly shaken the market , which now seems accustomed to the many months spent dealing with colossal failures , scams, failed promises and much more.

Well, perhaps this is precisely the main problem: the failure to realize promises . The great hype that had been generated around web3 – the promised third internet revolution, based on cryptocurrencies and blockchain – has melted like snow in the sun. The same goes for DeFI , the decentralized finance that was supposed to forever change the way we manage and exchange money, but which was instead founded on a series of companies that guaranteed huge returns to early investors only thanks to the constant influx of newcomers ( in short, a chain letter ), until the mechanism breaks .

Where is web3?

The blockchain-based GameFi , which was supposed to transform video games and allow everyone to earn money by playing, has become a tool used above all to exploit the inhabitants of some developing nations; while the various blockchain-based metaverses – from Decentraland to The Sandbox , capable of attracting frightening amounts of capital – are today ghost villages frequented by a few thousand obstinate enthusiasts. And then there was the enormous NFT bubble, the collapse of a giant in the sector like FTX and a huge amount of scams that we couldn’t even begin to summarize here.MOST READ ARTICLES

“A slew of so-called decentralized Web3 companies were really just three people, a couple of servers, and a plan to inflate prices ,  Will Wilkinson, chief policy officer at fintech giant Block, told the Atlantic . In short, the entire cryptocurrency sector is constantly plagued by its historical problems , without ever being able to leave them behind and thus leading many investors to lose confidence and withdraw their capital, triggering a vicious circle from which it is difficult to recover .

Of course, a reality that has always operated seriously like Ethereum has made great and concrete steps forward , but what use is an efficient and scalable blockchain platform when all the projects that are built on it (i.e. those linked to the world of web3) Are they useless? What is the point if platforms like Solana, Cardano or Polygon prove to be rich in technical potential when none of their promises are kept?

Bitcoin is dead, long live bitcoin

At this point, one thing must be specified: it would be a mistake to give bitcoins (which, at least, have a function: that of a pure and simple investment good) and the other cryptocurrencies as doomed, given that they have shown now on hundreds of different occasions to be able to recover from any crisis . It cannot even be ruled out that in the future concrete and successful functions will finally be found for these tools or that the longed-for web3 will actually take shape .

Furthermore, cryptocurrencies have proven to be a useful tool for paying remittances, for example, for financing the Ukrainian resistance and for other noble causes. Wanting to be cynical, however, there is above all a huge market in which cryptocurrencies have proven to be truly useful: that of illegality . This is no small thing: according to the World Economic Forum , this economy was worth something like 650 billion dollars ten years ago, while according to other estimates today it could be worth 3-5 trillion dollars .

In an increasingly cashless future, it is inevitable that a large part of illegal transactions will take place through the most privacy-conscious cryptocurrencies (such as Monero for example). Is it really possible that this turns out to be the ultimate purpose of a technology born with the hope of changing the world for the better and with the dream of returning financial power to ordinary people?

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