Will the Crypto Market Continue to Crash in 2022?

Some people are saying that Bitcoin will drop to $10,000 by 2022. Others say Ethereum and other major cryptos will rise from their current plight. Some even believe that TerraUSD, the cryptocurrency pegged to the U.S. dollar, will implode and recover to become the number one cryptocurrency. But what if the latter is wrong? Will the crypto market continue to crash in 2022?

Bitcoin Price Will Tank To $10,000 In 2022

The Bitcoin price has soared to record highs, but now it is under $50,000, a loss of almost 30%. While this is a bear market, according to Wall Street wisdom, bitcoin’s volatility is not without reason. One professor at Sussex University, Carol Alexander, believes that bitcoin will plummet to $10,000 by 2022 and result in a “free fall” into a bear market.

Moreover, China’s move to ban cryptocurrency exchanges and the Federal Reserve’s cut in liquidity is also a massive contributor to the decline. As a result, many cryptos have continued their downfall through 2022. One notable event is a “bank run” in May 2022, when traders feared TerraUSD would run out of crypto assets to back peg to the dollar. This news spilled over to other crypto markets and drove prices down.

Although many crypto experts believe the cryptocurrency will crash to $10,000 in 2022, others say it could hit the $100,000 mark within a few years. A recent study by Deutsche Bank shows that a quarter of investors think Bitcoin will reach $110,000 within five years. This volatility is one of the biggest reasons new investors should be cautious, but there is no reason to be pessimistic. Even if the cryptocurrency is on the decline, it will continue to rise in value in the long term.

However, in the long run, loose monetary policies will likely drive investors away from fixed income investments and into long-term growth assets. Because of the limited supply, it is doubtful that Bitcoin will reach $200,000 this year or even $100,000 in the next decade. However, if macroeconomic conditions deteriorate, Bitcoin will be at a new all-time high between $75,000 and $90,000.

TerraUSD Imploded

Despite the lack of regulatory oversight and the shaky market, many investors still wonder if TerraUSD was just another get-rich-quick scheme. One Massachusetts surgeon lost his family’s nest egg. Another young Ukrainian had almost lost all his savings, and other investors had given up on their dreams of starting their businesses or quitting their day job. If the terraced implosion is anything to go by, the future of crypto could be in jeopardy.

The UST crash is another example of a centralized pressure point in a crowded ecosystem. Do Kwon, the CEO of Terra, used his position to protect the Terra coin, but in the process, he essentially destroyed the entire crypto market. And now, the company is looking for other ways to keep the ecosystem healthy.

The UST and LUNA, backed by TerraUSD, were supposed to remain at $1 each, but that’s no longer the case? TerraUSD backed the LUNA crypto token, but it has since lost all of its value.

The UST stablecoin, or UST, is a part of the Terra network. The UST also had a sister coin, the Luna, which fluctuated. Investors panicked when the balance of the two cryptocurrencies became unstable, and TerraUSD lost ninety percent of its value.

TerraUSD Pegged To Dollar

The Price of cryptocurrencies like Luna and TerraUSD have suffered crashes recently. As a result of this crash, Luna sees a giant supply balloon. More people began dumping TerraUSD, resulting in a larger supply of Luna. On Friday, the Price of Luna plunged to $0.14, making it virtually worthless. Hence, the crash of the entire crypto market.

The European Commission has even suggested banning large stablecoin transactions. If the government of France is to prevent this from happening, the Price of TerraUSD will continue to crash in 2022. It would be similar to Lehman Brothers’ bankruptcy.

The collapse of TerraUSD has highlighted the risks of algorithmic stable coins. Despite this crash, the value of the cryptocurrency may recover. Investors should take caution and understand the risks before investing in any cryptocurrency. There is no definite answer to whether TerraUSD is a scam or a real currency. There are risks involved with investing in any cryptocurrency, and this crash highlights the importance of being informed.

The most significant risk with a cryptocurrency is that it relies on supply and demand economics to survive. The UST has not had a stable price since May 2017. The Price of LUNA, the cryptocurrency tied to the U.S. dollar, will continue to crash in 2022.

Read More: Is the Crypto Market Starting to Recover?

Bitcoin’s Price -Correlated WithInflationn

Inflation has become a hot topic among investors in recent months, as global economies emerge from a period of pandemic deflation and structural problems anchor monetary policy to low levels. The most likely reasons for sustained inflation are increased government spending, new regulations that reduce corporate profitability, and tight labor markets.

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