Cryptocurrencies have been in our stamina since the breakthrough manifest of Satoshi Nakamoto on 31 October 2008. This pseudo person or persons published the game-changer declaration, “Bitcoin: A Peer-to-Peer Electronic Cash System”, to highlight that our current financial technique is not our only resort. The paper articulated an ecosystem externalizing the regulatory powers and governments which have reigned to coin money for centuries.
The new guideline was not only rebellious but also fetched our clarity back. Do we really doom higher institutions instructing us which one is the currency or not? This giant question mark was a spin-off for Blockchain and crypto currencies, and once again, just like any fundamentalist philosophy, perspectives would change one by one. However, unlike cheques or conventional banking systems, cryptocurrency would have blanks and roundabouts along with generous profit.
Yes! This new track of the crypto market was puzzling for many investors, even the old boys, who have detected immense inflations and slumps worldwide. That’s why cryptos have been blamed for being a “Ponzi Scheme” for over a decade. The fun fact is that traditionalistic investors passionately against these futuristic currencies have become the most faithful ones stockpiling them in their portfolios. Because of the cryptocurrency market’s high volatility, it is an excellent opportunity for short buy/sell positions.
Factors Influencing Crypto Prices
Crypto coins arrive in a box labelled “Fragile”. There are various reasons why global events impact their worth tremendously. As we saw in 2020, the price of Bitcoin rallied in September 2020. To guess the trigger event is not an enigma for any of us. Yes! The catastrophic COVID-19 also pivoted our trust in higher authorities such as traditional banks and, worst of all, governments. Instability led to vast amounts of Bitcoin, Ethereum, and other promising crypto currency purchases, and the total market value ascended as never before. When popular fiat currencies and stocks lost vogue, the cryptos initiated spreading among small and large investors.
If you are familiar with forums concentrating on cryptocurrencies, you probably read a lot about them condemned to be unbacked. Although Bitcoin and other coins are mostly criticized for not being supported as monetary items, in fact, none of the 180 fiat currencies worldwide has an equivalent back in funds. Neither so-trusted United States Dollars nor the royal Pound Sterling. Therefore, this reasoning is entirely “Unbacked” and flawed. Just like any of them, cryptos are influenced by political modifications, catastrophes, regulations, taxes, and many more.
Since Bitcoin is still the most exchanged crypto currency according to market trends worldwide, we believe our article must exemplify the situation through it. As aforementioned, the next rally was in November 2021 as the most satisfactory month Bitcoin (BTC) peaked and surpassed over 65,000 USD. This is a gigantic leap, considering it was just 18,000 USD a year earlier. In this period of chaos and assumptions, some business tycoons like Elon Musk started to scale up joke coins like Dogecoin. Millions of Dogecoin investors monitored his tweets, and most grabbed exceptional profits by reading its outcomes on the market correctly.
On the other hand, when we reach 2022, the condition of Bitcoin and others evolved into a completely different scenario as if it was written by Victor Hugo. The bright coins began to yield their value sharply. At the time of writing this article (27.12.2022), a Bitcoin equals 15,641 USD, whereas its peer Ethereum is 1,134 USD.
Taxes Effect on Cryptocurrencies
Undoubtedly, we can contend with a plethora of reasons why cryptocurrency price levels dipped these days. This is the tax season in diverse countries, and many holders are bound to disburse their taxes from January through March. You know what Benjamin Franklin said once,” The only two certainties in life are Death and Taxes”. Bitcoin may have fallen due to selling positions to cover scheduled tax liabilities. This is a bit confusing by the disparate methods that jurisdictions treat capital gains.
The Role of Market Trends
Perhaps, cryptocurrencies offer an independent and decentralized pattern for us, yet still, they are susceptible to political metamorphoses. Investors with knowledge of how cryptos react to new regulations and significant shifts envision that the boost in interest rates and borrowing costs of the Federal Reserve may result in a tendency on these options instead of crypto space. Another game-changer is advancing bond yields which deliver a safer bet than Bitcoin and others. When we combine these analyses with persistent inflation, unavoidable recession, and other large-scale economic concerns, many believe that crypto investors, even the ones chasing its philosophy passionately, may alter their wheel to more secure ports like bonds, high-interest rates, and all-time-favorite gold. This trend could be echoed in the Bitcoin price as well as other digital tokens, and traders may take their positions for approaching turbulences.
All in all, will these prices harbor these levels? Nobody can give you a point-shot answer! This is a bizarre world recasting at the speed of light. We can wake up to a totally different day tomorrow, just like the breakthrough of COVID-19 in March 2020, another creepy war, or a political scandal. Ratios may adjust, and cryptocurrencies may become must-have manias around the globe.
Please keep in mind that every single asset comes with a risk, even if it is a gorgeous mansion in London, Euro, a stock of Facebook, or a gold bar! It has always been this way for thousands of years. We would like to conclude our article with a quote from an inspirational financial brainiac, Warren Buffet. “I will tell you how to become rich. Close the doors. Be fearful when others are greedy. Be greedy when others are fearful.”. We are with him on that, for sure! What about you?