The onset of August seems to bring some relief for the cryptocurrency markets. The global crypto market cap has breached $1 trillion levels and is at $1.05 trillion on Tuesday as per data from Coin Market Cap. Bitcoin is trading at $23,405 and Ethereum is trading at $1,584.
Cryptocurrency markets have been in a free fall since the beginning of the year. Geopolitical tensions, an ongoing pandemic, and rising inflation rates have added to the woes of the markets. The global crypto market cap fell from $2.3 trillion dollar levels in January to $800 billion levels in July, down over 60 per cent.
Major cryptocurrencies like Bitcoin and Ethereum also felt the brunt of this crash. Bitcoin, which was trading at around $50,000 levels in January crashed below $20,000 levels by July. Ethereum tumbled from $4,000 levels to $1000 levels in the same time frame.
However, with the crypto market finally recovering from major slump, crossing the $1 trillion-mark again, does this mean that the bear markets have run their course? Experts have varied opinions.
Bull run in the offing?
Rajagopal Menon, Vice President, WazirX remains optimistic about the state of the crypto markets. Menon highlighted that certain indicators hint that market uncertainties are clearing up and an uptrend is in the offing.
Menon told Business Today, “The second half of 2022 will clear the smokescreen that was created due to dampeners such as the Ukraine-Russia war, inflation and supply chain problems. We can already see some indications of that as Bitcoin prices revive - it has been up by 21 per cent from past months, and Ether is up by 60 per cent. In addition, the uncertainties that markets weren't prepared for at the start of the year have been priced in, resulting in improving investor sentiment. The market uptick post-Fed hike is a clear signal of this.”
Similar views were echoed by Ramkumar Subramanium, co-founder of GuardianLink, an NFT marketplace. He told Business Today, “The past few months or maybe even the quarters might not have been the best months for the crypto and blockchain space. However, the tides have turned for good for the crypto space as we can observe some relieving increase in the value of crypto coins in the second half of 2022.”
He also said, “As per our market research, we have also witnessed market sentiment exit the 'fear' zone as Bitcoin becomes bullish. Hence, we expect this positive sentiment to pave the way for the year ahead.”
Volatility to continue?
Despite the recent recovery in the crypto markets, some experts still remain doubtful of a sustained bull run. Amanjot Malhotra, Country Head-India of Bitay, an international crypto exchange, told Business Today, “Markets are going to remain volatile in the second half of 2022. The markets will witness relief rallies in the coming times but a bull run is not expected in general.”
Suraj Kalwani, co-founder of Crypso, a crypto education platform, shared similar views. He said, “In all likelihood, the crypto market will continue with bearish mode throughout 2022 with further dips coming along later in the year.”
Kalwani argued, “For one, there's a trend that is now becoming evident and that is the correlation between S&P 500 and pricing of crypto assets. Second, the macro-economic environment doesn't seem encouraging given the ongoing war, inflation and federal governments tightening the screws on spending. Since the growth outlook of the S&P 500 index looks bearish, there's no reason why apparently this would not get reflected in the crypto markets in the second half of 2022.”
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