The last few months have been described as a “crypto winter”. Inflation and recession seem to be the theme the world over. Added to this is the situation of conflict and war in Europe. At a time when the market is far below its peak, what does the future of crypto look like? Is the market going to continue on a downward trend, or is there a silver lining?
Early History of the Crypto Market
Bitcoin is the first crypto token ever created. The first block of the Bitcoin network was mined on January 3 2009. This followed immediately after the global financial crisis, which led to widespread recession and loss of livelihood. To commemorate this day, the first block of the Bitcoin network included an encoded message, “The Times 03/Jan/2009 Chancellor on brink of second bailout for banks.”
This message highlights the economic situation at the very time that the crypto market was born. In the first few months of Bitcoin being created, it had almost no real-world value. The first time it crossed $1 was in February 2011, two years after it was originally mined.
Litecoin was one of the first coins that appeared to rival Bitcoin. Soon after its creation in October 2011, it became the second-largest crypto in the market. There were a few other coins that trailed behind, with all of them being dubbed ‘altcoins’. This is because most of them were simply forks from Bitcoin and functioned very similarly.
In 2013 Bitcoin hit another milestone of crossing $1,000. However, plagued with regulatory and criminal issues, it faced a long crash down to almost $150 in 2015.
Ups and Downs of Crypto
It was 2017 before Bitcoin could get back to its previous high of over $1,000. A software upgrade to the Bitcoin network that enabled support for the start of the Lightning network was launched in August of the same year.
Almost immediately, bitcoin rose to $3,000. Finally, near the end of the year, Bitcoin reached another all-time high of almost $20,000. This made its presence known to almost the entire world as Bitcoin seemed to become a household name.
In the same year, Ethereum became the second-biggest crypto token. However, unlike the altcoins before it, it offered unique functionality like smart contracts. It also enabled other projects to build on it and launch their own chains.
Soon after this high in the crypto market, it fell for an extended period. By 2018 Bitcoin had fallen all the way to $3700. However, it didn’t stay at that level for long. 2021 was the best year for the crypto market yet, when Bitcoin soared far beyond everyone’s expectations to $69,000. In 2018, this was unthinkable. But innovations in and support for the crypto ecosystem pushed the market to heights unimaginable just a few years prior.
Crypto Market Today
All this turbulence in the crypto market brings us to the situation today, a world under threat of recession and war. Alongside crypto’s fall, there has also been a fall in stock markets worldwide. This indicates a greater alignment between the crypto market and other traditional markets. Then it must also be assumed that crypto cannot continue a bull run while the rest of the world faces an economic downturn.
But just like the creation of Bitcoin in a financial crisis, the crypto industry today is focused on developing and building. There are so many different innovations in the space it becomes hard to keep track. From the metaverse and NFTs to decentralised finance and web3, the industry has a rich variety of new technologies that can propel innovation in other industries today.
What is the Future of Crypto?
Based on the history of crypto available above, it looks like crypto is not disappearing anywhere. Crypto has always been cyclical, with this being just another downturn in its cycle. As the crypto market emerges into the mainstream, it has synced up with the rest of the financial markets and the economy.
Analysts expect this crypto winter to last into 2023. They believe that a combination of the pandemic and monetary support from governments exacerbated both the boom and bust in recent years. This gave some investors a lot of time and money to boost the market, which is no longer sustainable. Therefore, it may take some time before the market can settle back to normalcy.
However, there is hope on the horizon. After worldwide economies settle, it is expected that there will be a sharp acceleration in the crypto space. Analysts predict that this acceleration will begin in 2024 and last into 2025. Lisa Ellis, a MoffettNathanson analyst stated, “We anticipate that 2025 will be the peak year of the current crypto cycle.”
Finder.com predicts that in 2025, Bitcoin will reach over $250,000 from its previous high of $69,000.
The current downward trend in crypto markets seems daunting. However, it is essential to remember the history of crypto. From its very beginning, crypto has been a tool to tide over recessions. Additionally, this is by no means the first bear market crypto has experienced. But every time it has gone down, it has bounced back stronger than ever. Once the market settles, crypto seems ready for its biggest bull run yet.