Will the crypto market bounce back in 2022? Here’s what experts are saying

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Disclaimer: The opinion expressed here is provided for informational purposes only, and is not investment advice. There is risk involved while investing so, you should always do your research before making any decision. Sociobits’ opinions are not necessarily being reflected here and we don’t recommend investing money that you cannot afford to lose.

Cryptocurrencies are going into a turmoil of disasters. Let’s forget about the future of cryptocurrencies and focus on what is happening in the industry right now. Crypto companies are declaring bankruptcy left and right. After the crypto market crashed in June 2022, Three Arrows Captial closed down, and following this, companies like Vauld, Celsius Network, and Voyager Digital stopped their operations.

The Indian crypto trading platform, WazirX is also being investigated by the ED for money laundering. Because of this, crypto investors are thinking about what they should do with their investments. Whether they should stop investing in crypto or should wait to see what will happen has become a common doubt among crypto investors. Some of us are also expecting whether there’s a chance for the market to bounce back in 2022. Here’s what some crypto experts are suggesting about it:

1. Oleg Galeev – Crypto Expert and Writer at OCryptoCanada.ca

Oleg Galeev - Crypto Expert and Writer at OCryptoCanada.ca
Oleg Galeev – Crypto Expert and Writer at OCryptoCanada.ca

In my personal opinion, the current upward trend could be short-lived, and here’s why.

The cryptocurrency market will likely remain low for the foreseeable future before the possible surge to its new all-time high, just like what happened after the 2013 and 2017 Bitcoin crashes. In both crashes, Bitcoin lost more than 80% of its value. It has fallen by 70% since the all-time high in November 2021, mirrored by the whole crypto market.

The recent bankruptcy filings of several crypto companies such as 3AC, Celcius, Voyager, and BlockFi could be just the tip of the iceberg.

High inflation and the looming US recession will likely lower the demand for cryptos as high-interest rates make low-risk interest-bearing securities more attractive. In a time of economic uncertainty, investors tend to be more conservative in investing and prefer more liquid assets.

Aggressive interest hikes will result in fewer people entering leveraged investment positions, which means fewer people will trade… Same with high prices of goods during inflation, people will have less money to spend on investments.

2. Andrew Lokenauth – Founder of Fluent in Finance

Andrew Lokenauth - Founder of Fluent in Finance
Andrew Lokenauth – Founder of Fluent in Finance
  • No. Crypto is falling because of leverage. Investors, traders, exchanges, and projects were very over-leveraged, which has caused this mass liquidation we’ve seen. It’s going to get worse before it gets better. There was too much leverage in crypto for its own good. Declines will continue as collateral is liquidating
  • Crypto bear markets take away the tourists from true believers.
  • However, Bitcoin is being endorsed by more and more billionaires, banks, and institutional investors every month. Truly remarkable that mass adoption is occurring at this pace, Bitcoin still has plenty of room to grow.

3. Carter Seuthe – CEO of Credit Summit

Carter Seuthe - CEO of Credit Summit
Carter Seuthe – CEO of Credit Summit

Cryptocurrency needs some combination of a more economically-useful application and clearer and stronger regulations to really recover from its current, ongoing crash. While the underlying technology of cryptocurrencies, specifically blockchain, is a secure, effective way to create a permanent, unalterable record of information online, crypto assets with no real underlying value beyond that security feature aren’t the best way to make this technology into a viable trading asset. I expect that we’ll see some more changes in the market before the new version of crypto takes off, probably in a way we can’t fully predict right now.

Also Read:  This is what happens to investors' money when a crypto company goes bankrupt

4. Barry Weinstein – CEO of VolatilityMarkets Newswire

Barry Weinstein - CEO of VolatilityMarkets Newswire
Barry Weinstein – CEO of VolatilityMarkets Newswire

Over the past 29 days, the BTCUSD price increased 11 days and decreased 18 Days.
For every up day, there were 1.64 down days.
The average return on days where the price increased is 3.3713%
The average return on days where the price decreased is -1.1526%
Price today(16th August 2022) – $ 24,188.33
Over the past 29 Days, the price has increased by 16.33% percent.
Over the past 29 days, the average return per day has been 0.5631% percent.
Over the past 29 days, The price has on average been accelerating: $ 54.61 dollars per day higher
If markets continue with his pattern where the price is more often down than up, with larger moves to the topside than downside, then crypto will have a down the escalator, up the elevator year.

5. Richard Gardner – CEO of Modulus

Richard Gardner - CEO of Modulus
Richard Gardner – CEO of Modulus

I don’t think you’ll see a revitalized crypto market in 2022. Note that the rally you’ve seen over the past few weeks is coinciding with traditional markets. Since its low in June, the S&P 500 has increased by roughly 18%. The rally we’re seeing right now just isn’t sustainable.

However, cryptocurrencies have begun to closely correlate with traditional assets, and as interest hikes are beginning to more widely affect the economy, there will likely be more pain before the end of the downturn. While inflation has shown slight signs of improvement, we’re definitely not out of the woods, and those previous rate hikes will take time to fully trickle across the economy.

In order for cryptocurrencies to even have the opportunity to blossom, there must be regulatory action taken. While the EU moved forward on MiCA, its extended runway before implementation makes the short-term fraught with risk. It is unlikely that any major legislation in the arena will pass before the coming November election in the United States. Without that regulatory oversight, cryptocurrencies remain high-risk.

6. Kaushik Maturi – Head of Operations at Catalog

Kaushik Maturi - Head of Operations at Catalog
Kaushik Maturi – Head of Operations at Catalog

I think crypto winter will slowly end as we reach the EOY. This has been the cycle for the past couple of years, but this year is particularly interesting as the bear market has thrown a lot of DeFi companies off balance, who did not consider bear markets in their protocol design and tokenomics. These include Celcius, Terra, and a lot of other projects. So, I don’t see it as bouncing back but more as a natural selection of projects and teams that are of sound product and strategy.

7. Anup Kayastha – Owner of CryptoProfitCalculator

Anup Kayastha - Owner of CryptoProfitCalculator
Anup Kayastha – Owner of CryptoProfitCalculator

I do believe that crypto will bounce back, but 2022 might not be the year for this. There’s a current uncertainty in the global economy. To top this, the crypto market is also volatile.

With more than half the year gone by, there’s not much possibility for crypto to jump back up after its recent crash. So, the market will remain weak in the shorter run. In fact, chances are that Bitcoin may fall to as low as $10,000, a far cry from its whopping $68000 last November.

The persisting inflation and a looming threat of recession mean that the crypto market will remain fragile for the latter half of 2022 as well. This economic distress to expected to continue for almost the next two years. So, things might start looking good for the crypto market by the end of 2023 or early 2024.

8. Lark Davis – CEO of Wealth Mastery

Lark Davis - Wealth Mastery
Lark Davis – Wealth Mastery

2022 still presents a lot of uncertainty for the crypto market, considering our close correlation to equity markets which themselves are victims of geo-political uncertainty. I foresee some nice bear market rallies, but no new bull run in 2022.

The current market rally for crypto can be explained by a few simple factors. First, overly bearish sentiment after a 90% drop. Second, speculation on the Ethereum Merge. Third, the entry of Blackrock into the market. All of this is important when talking about fueling our current rally, but it is not enough to overcome the threat of a US recession, a gas crisis in Europe this winter, and persistently high inflation..

Also Read:  Liquidity Problems in Crypto Lending Firms: What caused it and How to fix it?

That being said, bear markets are what make millionaires. Now is the time to be paying attention to crypto and allocating capital.

9. Marc Arbones – Founder and Editor at Altcoins Mastery

Marc Arbones - Founder and Editor at Altcoins Mastery
Marc Arbones – Founder and Editor at Altcoins Mastery

The crypto industry is in a deleveraging phase that will not end until Ethereum merges, at which point we will see a crypto comeback.

The years 2020-2021 generated incredible gains for crypto investors. Everything, however, came to a halt in 2022 when the monetary circumstances that propelled them ended with a rise in interest rates. Top cryptocurrencies like Terra (LUNA) have collapsed, as have centralized, overleveraged financial companies like Celsius, BlockFi, and Voyager Digital. Leading crypto hedge funds like Three Arrows Capital declared bankruptcy due to excessive leverage, while Coinbase shut down its affiliate program and laid off 20% of its employees.

All of these failures have one thing in common: Overleverage, the oldest mistake in the book. As the dust settles and the leverage unwinds, I expect a crypto comeback led by the Ethereum Merge (September 2022). Ethereum is down ~50% year-to-date and has already recovered 100% from its bottom on June 18th, 2022, while Bitcoin has recovered 40% (from its low in June). I’m starting to see rays of light. The second half of the year looks brighter.

10. Evgen Verzun – Founder of Kaizen.Finance

Evgen Verzun - Founder of Kaizen.Finance
Evgen Verzun – Founder of Kaizen.Finance

On a global scale, nothing is happening to boost the cryptocurrency market. Neither legislative initiatives, the CBDC, nor the global crisis has given us signals of a reversal of the current trend. BTC’s long-term trend remains downward and I’m leaning towards a squeeze below the current low. The current correction from the recent lows does not yet indicate a reversal of the downward trend if we’re talking about technical analysis. New BTC low can reach $15,000, and in the event of a deterioration in the global situation, even $12,000. In the long term, I believe that the market should form a new bottom, it won’t happen immediately, but rather after a period of stagnation.

11. Nick Ranga – Crypto Expert at AskTraders.com

Nick Ranga Senior Cryptocurrency and Forex Analyst for AskTraders.com
Nick Ranga Senior Cryptocurrency and Forex Analyst for AskTraders.com

If previous crypto market cycles can be trusted, then we can expect another 4-6 months of sideways trading. A recent report by Grayscale Investments* suggests we are approaching the bottom of the market and can expect prices to consolidate before climbing back towards new highs. It’s unclear when exactly the current shakedown of crypto markets will end, as we have new factors to take into account this time around.

Decentralized lending has become more prominent within the crypto sector and larger macroeconomic factors, such as inflation, will certainly have an impact as well. Many expect the Fed to begin cutting interest rates in 2023 which could be the turning point for crypto markets. We also have the next Bitcoin halving event on the horizon, however, due sometime in 2024, which could signal the end of the current crypto winter.

12. Scott Guttenberger – VP of Marketing at Topl

Scott Guttenberger - VP of Marketing at Topl
Scott Guttenberger – VP of Marketing at Topl

If the crypto asset class recovers, the process will likely be led by Bitcoin and Ethereum. Bitcoin, particularly, is one I would expect to bounce back this year. Many participants have become insolvent; the wave of forced selling that has been acting as an overhang for Bitcoin will slow down and change direction. The reset allowed many new investors to jump in on promising projects at great discounts. Now that consumer confidence is slowly returning, there could be even more support pouring into these “blue chips”. Added to that, the FED’s Interest Rate hike was pre-baked and had little to no real effect on the markets. That, together with a steady increase for both BTC and ETH, points towards stabilization and recovery—unless anything catastrophic or world-changing happens.

While people who trade in crypto have seen how the market moves but it can be hard to predict what will happen to cryptocurrencies by the end of 2022. The experts rightly pointed out what can be considered and what shouldn’t be to give us a better understanding of what is to come.

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