We are in a recession. The United States has experienced two consecutive quarters where the GDP is exceedingly low, and by all definitions, this is exactly what a recession is. There are many people out there that continue to talk about how it’s something that could happen, but nobody is really talking about the fact that it’s already here in many ways, and it’s never been more evident than through the tanking crypto prices that 2022 has witnessed.
Crypto Continues to Tank
Crypto has done very poorly this year. Despite hiking prices in both 2020 and 2021, we are once again seeing signs of 2018 happening all over again as this time around, bitcoin (like it did four years ago) has lost more than 70 percent of its overall value, and the digital currency industry has fallen to boast a valuation of less than $1 trillion when during the year’s early months, it was at over $3 trillion.
The problem likely stems from the Fed seeking to instill higher rates as a means of fighting inflation, but this hasn’t really done anything in the long run. All that’s occurred is people can no longer afford homes or vehicles and the crypto world continues to sink into oblivion. It’s a rough sight to see, and with the Fed now scheduled to potentially keep these rate hikes up through the end of the year, many industry heads and analysts think things will get a lot worse for BTC before they get better.
Mike McGlone – a senior commodity analyst with Bloomberg Intelligence – said in an interview:
We have to turn over to the macro big picture and what’s been pressuring crypto this year, and that is the Fed sledgehammer.
For the most part, the bitcoin price has spent the better part of Q2 and Q3 of this year trading in the low $20K range, though now the asset has dipped below that, and many traders are getting extremely concerned that the crypto space is heading to a point of no return. Susannah Streeter – senior investment and markets analyst with Hargreaves Lansdown – said in a statement:
There has been a fresh bout of anxiety on financial markets amid worries that inflation is still proving to be a formidable opponent to take down. Crypto assets [are] still highly entwined with the fortunes of the equity markets, and given that they’re seen as highly risky assets, there has been a flight away from the crypto Wild West as investors search for less turbulent places to put their money.
Could Things Worsen?
McGlone further added that things are going to be far worse than they were in 2008. He mentioned:
I think it’s going to be worse than the 2008 correction, worse than the Great Financial Crisis. The Fed started easing in 2007, and then they added massive liquidity.