What are the forces behind the accelerating decline of crypto since January? Is the economy inherently flawed and crypto dead?

I’m a casual and have put bits an pieces in and out of crypto for a good while but I can’t say I’m particularly well versed in the market forces behind it.

I’ve done well in the past and don’t HODL as I always feared legislation or some other force would cause big investors to pull billions out of crypto all at once which could topple bitcoin and the rest would come falling down like a house of cards.

You all seem very well versed in this area, so what I want to know that considering the incredible dips in the market since January, which show no sign of ending ATM, do you honestly think the markets will recover and become bullish again in their current form the next 10 years?

Or do you think that some fatal flaws in the whole economy have been exposed and that crypto is going to be decreasingly viable as an investment and will eventually just get rolled into a centralised currency system to replace fiat currencies – with all the same pitfalls of inflation and centralisation?

If this is the case, please explain to me the forces behind this and why crypto may be on its deathbed?

Please feel free to discuss all opposing points as I’m sure it will yield some very interesting answers.

Thank you in advance.

EDIT: I have no opinion on this, I’m not declaring it dead, I’m hoping this discussion will further inform me of the viability of continued investment. I’m not trying to spread FUD.

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19 thoughts on “What are the forces behind the accelerating decline of crypto since January? Is the economy inherently flawed and crypto dead?”

  1. Don’t make the mistake of declaring crypto dead. Its been done hundreds of times and none of those declarations were right. So no, crypto isn’t dead.

    The market forces affecting crypto are the same as that which is affecting the rest of the market. First, we have the Covid-19 pandemic, then we have the economic crisis that came from it. And now we have the war, the resultant food and oil crises and now we’re in the middle of a worldwide pandemonium now.

    It’ll all eventually settle down. It’s always the case.

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  2. I honestly don’t think that crypto will ever “die”. The moment that all these federal agencies started investing in blockchain technology I knew it was going to continue. That’s just my two cents though.

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  3. One thing that is concerning but also probably better long term is that with higher interest rates, there will be less people in such a speculative assets like crypto.

    The growth should be somewhat more organic though it will still be volatile, but getting back to some ATHs might take a long time.

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  4. Maybe add what coins you own?

    1. The whole crypto sector is massively leveraged bc some use it to gamble their whole fortune.
    2. Stablecoin issuers who can print money out of thin air might be a factor for the heavily inflated economy. Just check the reports of Bitfinex’ed
    3. Crypto isn’t regulated, the future of particular coins is unclear – this makes a highly risky environment that reacts allergic on macroeconomic risk.
    4. Some projects are plain frauds and they implode once a ull market ends and no new money pours into the scam.
    5. People expect cyclical behaviour and take put their money to reinvest later. This makes steep drops and occasionally steep increases since they as well tend to gamble on future prices.
    6. General macroeconomics.

    Crypto on the other hand has potential and this means it is an investment that even if it doesn’t have current usecases has the prospect to change how we transact value in the future and how we avoid to trust in platforms. Crypto.has been deemed dead 1000s of times. There is a non neglectable possibility that this will happen, but since this is – as well – a speculative assessment the economy may experience downturns that are mainly guided by fear and not by a rational outlook. I mean if you see your portfolio drops to 5%…this is scary shit and many will sell. Consider it an extended prisoners dilemma where those who bought in on later fools theory drop out like dead flies. I lived through 3 of these phases and it hasn’t been less scary for those who are in for the long haul. Still I consider it interesting times.

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  5. >If this is the case, please explain to me the forces behind this and why crypto may be on its deathbed?

    Prices may go lower but Crypto won’t die – it exists outside of price action. Even when Bitcoin was worth 10 cents there was still people willing to run nodes and validators. The same thing with Ethereum.

    I personally use the Ethereum network all the time to buy and sell cards in a card game I play. I know a lot of other people that use the network for all kinds of things.

    There will never be a lack of people willing to run nodes, there’s just too many people that love the tech.

    Bitcoin is not a company. It doesn’t have a CEO. It’s not a corporation that can go bankrupt and have its assets frozen. It only fails when every single miner turns off their rig.

    Ethereum is slightly different, in that the Ethereum foundation makes most of the improvements, however they have over $300mil in cash and other non-crypto assets, so they’re not going to go bankrupt for a while.

    As for other chains, it’s on a case by case basis but in general the more decentralised they are, the more resiliant to market forces they will be.

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  6. A pretty huge source of misunderstanding is that people tend to treat crypto cycle as something that happens in a vacuum.

    The intense stimulus during the pandemic made people have more disposable income while saving money from being locked out of their usual activities due to lockdowns and quarantines. This changed peoples habits, made them more willing to invest that surplus of money and take risks.

    Some individuals and institutions took advantage of that situation and cryptos volatility to run intense marketing to convince a lot of people to get in, and once the value started pumping you ended up with market euphoria and a bubble that was bound to pop at some point.

    At peak bullrun I think it’s more likely that some large institutions (mining included) started to cash out to recover their investment which already caused some panic selling. Then recession started getting discussed, ideas of quantitative tightening was being brought to the table, then some big crypto business started to collapse either due to incompetente and fraud, the quantitative tightening really started putting into plan… we just ended up with this scenario were people become a lot more risk averse, crypto started showing some dangerous fragility, people preferred to not double down and just have their money at hand and we ended up with this continuous downwards trend.

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  7. 1. Fed says no more free money and economy in trouble
    2. Essentials start to get costly
    3. People panic and investors start to sell things that are most risky aka crypto first
    4. Markets go to shit

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  8. Bitcoin death fallacy: You expect that after declaring bitcoin dead 500 times the next one it will surely stay dead

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  9. The Bank of England is releasing tokenized bonds.

    44 nations attended El Salvador’s Bitcoin-for-Central-Banks summit.

    The US Congress has a major bipartisan bill to fold crypto into the financial regulatory regime.

    Goldman Sachs has “digital assets” on their front page and JP Morgan said they’ll do settlements on blockchain.

    Don’t mistake price for value. If anything, it is being manipulated lower so the institutions can accumulate at a good price and control it.

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  10. *since November.

    And it’s supply and demand.

    We’re seeing the same volatility and greed vs fear we see every cycle.

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  11. Crypto being declared dead left, right and centre? Bullish. Time to sell the doors to generate some final fiat to buy more.

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  12. It’s (again) old news. New money is not flowing in atm. We’ll habe to wait till the next halving where we get new retail investors and the whales have again play place

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