It’s probably not what you want to hear.
Several cryptocurrency industry players have told CNBC that many of the currently existing 19,000 cryptocurrencies will disappear in the coming years, while the number of blockchains in existence will also fall over the coming years.
In the last month, Bitcoin has dropped by roughly 25%. Ethereum has fallen by about 35%, and Solana has fallen by about 50%.
Philipp Sandner, the Frankfurt School Blockchain Center head at the Frankfurt School of Finance & Management, told Insider that bitcoin and other crypto tokens had been “dragged along” with the UST and Luna crashes. Luna recently lost almost 99% of its value.
Sandner stated that various overvaluations caused the collapse and inflated token prices, referring to the cryptosystem’s “nearly monster structures.”
Cheap money is a thing of the past. However, it is not only UST generating issues for bitcoin and the crypto world.
According to crypto expert Timo Emden of Emden Research, a cryptocurrency and blockchain research organisation, ‘rising interest rates impact prices’.
Increasing interest rates are poison for hazardous asset classes, he warned.
Considering the low-interest rates of recent months, “the fear of rapid interest-rate hikes, particularly by the US Federal Reserve, is removing one of bitcoin’s most critical impulses,” he said.
Bitcoin and other cryptocurrencies appear to be linked to tech companies, as the crypto fall coincides with a sell-off in more established stocks.
On the other hand, Emden believes it is still a “wonderful and exciting” technology.
“All of the bitcoin swan songs are, in my opinion, too early,” Emden remarked.
“In terms of bitcoin’s price, a drop to $20,000 should not come as a surprise,” Emden added.
According to Rudy Capital crypto researcher Thomas Faber, the present macro picture is “pretty dismal.” However, he believes the long-term view “remains good.”
“Its disruptive potency in many domains, like decentralized finance, remains undiminished and will gather speed in the coming years,” Faber said.
However, according to him, investors can expect more significant reductions in the immediate future.
Emden’s recent meltdown demonstrates the existing aversion to hazardous asset types.
Investors who are panicked are fleeing their investments, he said.
“At the time, no one wants to grab the falling knife. Bargain hunters are still staying away. The primary predicament and technical situation remain murky.
The stock market’s lights are flashing red. Many investors must decide whether to try to ride out the crash or sell their residual book profits at the “last second,” according to him.
Momentum has developed that is impossible to reverse, Emden went on.
He went on to say that investors should brace themselves for further uncertainty in the coming hours and days.
The crypto crisis, according to Sandner, has left “a lot of scorched soil” for investors, particularly those who “never really interacted with cryptocurrencies, but just bought in any old tokens.”
According to the professor, we are in one of the “biggest crises for crypto assets.”
Sandner predicted that this will not be the last crypto crash:
“Bitcoin will collapse again in a few years.” This volatility, he argued, gave a rationale for tougher regulation to rein in crypto’s “wild expansion.”
Many people, according to Sandner, “have lost a lot of money” and no longer have the resources or the drive to invest more, so they’re “turning their backs” on cryptocurrency. He went on to say that this causes a lack of liquidity, which prevents the price from rising.
Sandner does not anticipate that cryptocurrency values will continue to plummet. “My gut feeling is that we’ve hit rock bottom,” he says.
If bitcoin fell another 25%, the other cryptocurrencies would fall another 35% or 50% due to the link, which would have plummeted by around 75% in just a few weeks.
“Perhaps many things were overstated, but I don’t see the tokens having less than 20% of their initial worth,” Sandner remarked.
Disclaimer: Quotes and exerts of this article are attributed to CNBC and the experts who commented.