Crypto descent – That’s why Bitcoin, Ether, Dogecoin and Co. are crashing

The crypto world is seething: Since November, the market for Bitcoin, Ether, Dogecoin and Co. has lost almost a trillion dollars. At the beginning of the week, Bitcoin even fell below the $40,000 mark. The price has since recovered somewhat and is around $43,000.

But the atmosphere remains tense. What is the reason for this and where does this development lead to? 20 minutes answers the most important questions and answers.

The main reason for this is monetary policy in the USA. In view of the high inflation in the country, the US central bank wants to raise interest rates. Investment bank Goldman Sachs expects four rate hikes this year. This makes investors nervous: “The general nervousness on the money and stock markets has a direct impact on cryptocurrencies,” explains Daniel Diemers, blockchain expert at SNGLR Group. Because crypto money is considered risky and is now being rejected by many.

There are two scenarios, says blockchain expert Diemers: “A so-called crypto winter would bring us lower prices over a longer period of time.” Bitcoin could then drop well below $20,000 and stay there for over a year. A more optimistic forecast assumes a short breather. Bitcoin could then reach new record values ​​of $100,000. «Possibly the dynamics surrounding NFTs and Metaverse will also pull crypto prices up with them. After all, you have to buy cryptos to be part of NFTs and Metaverse,” says Diemers.

Since the entire economy is in an upward trend, all the basic conditions for a recovery are in place. “If the stock markets go up, the crypto market also gets a boost.” Both systems are now firmly connected and influence each other. Thus, cryptocurrencies could set records again in a few months.

In principle, it is worth buying cryptocurrencies when they have reached a low level. However, crypto money always fluctuates wildly. “You should never invest more than you can handle even in the event of a total loss,” says Diemers. This applies in particular to people who do not have much experience with crypto trading: The expert advises that you should therefore not get into debt under any circumstances.

New investors are particularly hard hit. Those who have been there for a long time see the whole thing calmly. “Finally, Bitcoin dropped to $5,000 1.5 years ago,” says blockchain expert Diemers. Anyone who got involved in April and September 2021, when Bitcoin was around $60,000, is now unsettled. “But I don’t think it’s a very large group,” said Diemers. The expert advises that crypto investments should only be evaluated after a few years anyway. The price of crypto money fluctuates too much for short-term investments.