Best Time to Enter: Is 2022 the Year to Invest in Cryptocurrencies?

Crypto market slumped by over 40 percent
Decline as an opportunity to enter cryptos?
Bitcoin, Ether & Co. with potential

The crypto industry got off to a rather bumpy start in 2022, and digital currencies recently had to cope with a sharp correction. As recently as November, the total market cap of all cryptocurrencies peaked at almost $3 trillion – bitcoin had climbed to a record high of almost $69,000. Since then, however, the total value has fallen by more than 41 percent to around 1.72 trillion US dollars (as of February 23, 2022).

Since the beginning of the year, the cryptocurrencies have also recorded a dramatic decline: while Bitcoin had to tumble almost 19 percent to around USD 37,700 most recently, the price of Ethereum, the second-placed cryptocurrency by market capitalization, fell by almost 29 percent to USD 2,629. Meanwhile, Ripple has lost almost 15 percent to $ 0.7106 (as of February 23, 2022).

The trigger for the slide in prices was seen as the fear of rising interest rates and the associated increase in bond yields. In addition, various states have announced restrictions against Bitcoin & Co.

Price slide as an entry opportunity?

Now, is this recent drop a chance to get into cryptos? In general, investors should always be aware of the risk and volatility of digital currencies and ensure that their portfolio is sufficiently diversified. Regardless of the current turbulence and fluctuations in the crypto market, experts are still confident about future crypto developments.

For example, US investor and Bitcoin fan Max Keizer expects a Bitcoin price of 220,000 US dollars in 2022. “[Der Bitcoin] “It solves a problem humans have had for hundreds of thousands of years, the need to trade value for value across space and time,” said the former Wall Street trader. Keizer also welcomed the adoption of Bitcoin as legal tender in El Salvador JPMorgan analyst Nikolaos Panigirtzoglou was also bullish in a recently published study and recently raised his long-term price forecast from $146,000 to $150,000, while experts at research firm FSInsight also believe that the Bitcoin price will break even this year could break the $200,000 mark, while Ethereum is likely to rise to $12,000 in 2022. The experts also see some potential for the second-largest cryptocurrency, as a significant milestone is imminent: the upgrade to ETH 2.0. Blockchain is moving from the previous proof-of-work to a proof-of-stake model, which should make Ethereum both significantly faster than a also become significantly cheaper. In general, there is great interest, also because Ethereum offers numerous functions such as decentralized financial instruments (DeFi), decentralized applications (DApps) and also non-fungible tokens (NFTS). These aspects also led to an optimistic forecast at Morgan Stanley. Cathie Wood’s ARK Invest also sees potential. According to the experts, the market capitalization of Ether could climb to $20 trillion by 2030. “According to our research, Ethereum could displace many traditional financial services, and its native token, Ether, could compete as global money,” ARK Invest experts said optimistically in their “Big Ideas 2022” report.

2022 could therefore be suitable for investing in cryptocurrencies such as Bitcoin, Ether & Co. Ultimately, however, investors should always keep the expected volatility in mind.

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