The Analysts: Crypto Winter is here!

CEO of Profit Jumpstarter, Keisha Bailey said the massive decline in cryptocurrency value is likely to continue for a while.

Speaking on Taking Stock with Kalilah Reynolds, Bailey noted that Bitcoin fell below the US$20,000 mark for a brief moment on June 14. While the price has since risen to just over US$21,000, Bitcoin is still down 55.69 percent year-to-date, as of June 16.

Ethereum is also down 70.41 percent year-to-date as of June 16, trading at roughly US$1114.

According to Bailey, the ‘crypto winter’ as the massive selloff has been dubbed, has been spurred by the increasing uncertainty in the global economy.

“We have general panic in the global economy because of high interest rates that we’re seeing everywhere. We have supply chain issues because China was in lockdown so long, the Russia/Ukraine war is still ongoing and inflation,” she noted.

She explained that as a result, investors have been dumping riskier asset classes and going to cash.

“They [investors] are getting away from risky assets like cryptocurrency and they’re hoarding cash because everything is just going down; all major assets are losing value so people are holding cash,” Bailey said.

Additionally, crypto trading platform Coinbase announced that it will be letting go of up to 18 percent of its workforce due to the increased market instability. The news triggered even more panic and selloffs.

Bailey noted that this pattern of behaviour is likely to continue while there is uncertainty in the overall market.

“We’re seeing heightened volatility with stocks so we have to expect worse volatility with crypto because it is so new. So, we’re in a crypto winter and it’s likely to continue for a while, while we are seeing issues with the broader stock market,” she said.

She noted that issues with the stock market are likely to continue while the global economy remains unstable.

Overall, Bailey said that in her opinion, the climate is not right to invest in riskier assets such as cryptocurrency.

“I personally wouldn’t be looking to get in on risky asset classes right now because we have too much going on,” she said.

“There are too many negative factors that would likely weigh down markets even more. We need to see some positive factors, we need signs that the worst is behind us before we can think about getting in,” she added.

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Sashell Williams2024-09-03T21:40:31-05:00