Individual investors were scared by the collapse of the cryptocurrency market in 2022.
In the hopes of making quick money, they had already flooded the sector one year prior.
All these hopes have been shattered by the collapse of many cryptocurrencies’ prices and scandals.
From its November 2021 record high of more than $3 trillion, the crypto market has seen a drop in value of $2.1 trillion. Investors have seen their portfolios’ value plummet. Some investors have lost almost all their savings.
According to CoinGecko, Bitcoin (BTC) is the most popular cryptocurrency in terms of market value. It has fallen from a record high of $69.044.77 on November 10, 2021, to $16,746.62, currently. BTC evangelists predicted that cryptocurrency would reach $100,000 by 2021 when many investors joined the crypto craze.
FOMO
These enticing predictions drew many retail investors to FOMO (Fear of Missing Out). FOMO is a crypto acronym that refers to anxiety about missing out on making money.
Although the market slump may have chilled amateur investors, BTC- and crypto-evangelists aren’t losing faith despite getting burned. Tim Draper, a billionaire venture capitalist, is an example of this. He predicted that bitcoin will reach $250,000 by 2022.
In an email to CNBC, he reiterated his prediction for 2023. This means that the price of bitcoin will rise 1,400%.
Draper stated that Draper believed that women hold 80% of retail spending and that only one in seven bitcoin wallets is currently owned by women.
Draper believes there are positive aspects to restart cryptocurrency’s rise.
CNBC’s Draper Fisher Jurvetson stated that he believes the 2024 halvening will be a success.
The Bitcoin protocol’s essential phenomenon known as the halving occurs approximately every four years. It involves halving the reward for bitcoin miners who register new blocks to the blockchain.
There are a few rules in the Bitcoin protocol that cannot be broken. First, there is a limit on the number of bitcoins that can be issued: 21 million bitcoins will be the maximum amount. This is what makes bitcoin valuable.
Initial Bitcoin network block reward was 50 BTC. A special clause in protocol, which is a rule that cannot be broken, reduces the reward over time: it’s the halving.
Uncertainty
The reward that miners receive for maintaining the Bitcoin network is halved every 210,000 blocks. This halving serves two purposes: It limits the number of bitcoins that are in circulation and it allows for the continued longevity of the blockchain.
The halving is generally four years in duration, as a new block is created on average every ten minutes. The halving is automatic and there is no need to perform any actions. It is already written into the source code for the crypto-asset.
Draper’s prediction has a major problem. There is still a lot of uncertainty surrounding the cryptocurrency industry. We don’t know the names of all collateral victims of Sam Bankman Fried, the disgraced former king of crypto.
After being at the heart of the crypto industry, Bankman-Fried’s crypto business collapsed on November 11. This was the FTX cryptocurrency exchange, and Alameda Research, a sister company that served as a trading platform for institutional investor.
Regulators are trying to figure out what happened and how FTX (which was valued at $32 Billion in February) could collapse overnight.