The drop in cryptocurrency markets is not something that a lot of the financial sector, both crypto and traditional, took easily. Instead, there have been a lot of discussions if the same space is now in such deep and troubled waters that any quick rebound is nearly impossible. While most crypto experts believe that this fact is basically true – the situation right now when it comes to the financial and economic macro factors is so bad that no solid foundation for a rebound could easily appear – the long-term potential is a completely different story.
More precisely, there are still countless individual investors but also institutions and organizations that quietly foster a strong belief in the fundamental values of digital currency. These are not present financial values like market capitalization or token price, but the underlying technology of applied blockchain. That includes not just Layer 1 cryptocurrencies. It encompasses a lot more than that, offering an entirely new financial and technological ecosystem that will play an ever-increasing role in everyday life. For many, the same belief in these values is the basis for a future rebound and even a possible bull run that would overtake the present record values, even if that process is not likely to take place anytime soon.
Bitcoin, with its fundamental values and principles, represents a good idea in almost every domain where it is present. However, according to some in the very highest levels of international finance, this idea has been skewed in practice with a lot of speculative interest and numerous influxes of cheap money. The last influence exploded during the previous couple of years, spurred on by the stimulus packages from numerous governments across the world. During that time, the now well-known purchases of bitcoin and other digital currencies valued at 1,200 USD – the exact price of the stimulus checks – became a regular feature of the crypto exchanges.
These companies more than willingly took on the same funds, no matter if they came from seasoned traders or esports players who have been in the field of digital currency for years, or regular individuals who were clueless about it. That level of volatile influence is combined with the general unsteady nature of cryptocurrencies. However, no matter the influence, the fundamentals never exited the picture and they stayed strong to this day.
Case of Amazon
Besides the fundamental values of bitcoin, there is also a rising argument that the present drop in value is just a breather in the overall progression of the space that is undeniable. Many are thus using the example of Amazon as one of the most poignant showcases of a strong but gradual recovery. The e-commerce giant fell along with all other similar dot-com ventures back in the early 2000s. The burst of that particular bubble was very damaging to the entire expanding space and it took down Amazon by some 90 percent. However, in the next 20 years or so, the same company rose around 300 times its original bottom value.
But, the setup was nowhere near that outcome for many other ventures that found a lot of initial traction in the same early internet years. Instead, a culling was necessary at that particular point and the expansion had to end for the truly stable and potent ventures to get enough breathing space to actually present sensible use-case scenarios. For Amazon, that use-case scenario keeps growing even to this day and the company is among the biggest on the market and a juggernaut in the entire field of digital businesses. Bitcoin could see a similar scenario play out for itself as well. The price for that would be for other smaller digital currencies to take a bow and exit the stage.
Further Falls in Value
Bitcoin and other digital assets could easily see further drops in value in the coming months. As the overall financial situation in the world remains at a critical point because of the war in Ukraine, rising inflation, and a potential new wave of the COVID-19 coronavirus looming in many countries, things for a crypto rebound do not seem great. The economy and financial situation in the US especially seems like an element of volatility that will likely become worse before it becomes better.
In the next six months, the US stock market will likely decline further, taking the crypto market with it. The current bear market has taken the S&P 500 down some 20 percent over the course of the year. There is a lot more room to go down according to many stock market experts. Because of this, many in the same financial business do not want to officially call the present situation the full bottom of the most recent crash.
New Currency Class
One of the key reasons for the present instability, besides all of the negative factors that influence the markets, is the continued global reliance on the USD. The currency of the United States of America remains the benchmark value for all trade and commerce across all oceans and all continents. That is what built up much of the present global society in the wake of WW2, but now it shows so many elements of wear and tears that it is hard to ignore the need for some change. Of course, this narrative quickly becomes mired in what might seem like a negative US sentiment. But, the truth is that even those highly supportive of the US understand that the current situation is doing more bad than good to the same country as well.
Here, in theory, the BTC token could play an important role and offer a form of global currency alternative. This notion immediately enrages many academics and financial experts, but the sheer necessity of a change in that global financial sphere still remains. Here is also where much of the rebound belief for bitcoin lies. No one knows when the rebound will happen, but this time around, it could be on a planetary scale where BTC goes hand in hand with the USD.