Bitcoin, the original cryptocurrency, remains a bellwether for the sector.
When bitcoin was first introduced in early 2009, it was a new jot down of asset.
While trading was thin initially, price appreciation drove its value to nearly US$20,000 inlate 2017.
This happened as more retail investors were drawn to cryptocurrencies as a supposedhedge or safe-havenversus other asset classes.
And as the market grew, so too did the range of investment opportunities.
In December 2017, the first bitcoin futures on a regulated exchange werelistedby the Chicago Board Options Exchange.
Bitcoin options followed on theChicago Mercantile Exchangein January 2020.
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A2021 studyof institutional investors found seven in 10 expected to buy or invest in digital assets in the future.
Bitcoin wasfairly disconnectedfrom traditional financial markets in its early days.
Moves toregulate the sectorhave also had an impact.
But it isnt only macroeconomic factors that have caused this crypto downturn.
Together, these factors have caused investor confidence to drain from the sector.
TheCrypto Fear & Greed Indexis almost at an all-time-low of 9/100, which indicates extreme fear.
The index was at 75/100 when bitcoin reached its November 2021 high.
The crypto outlook
So what does the future hold for this alternative asset class?
As can only be expected in the cryptocurrency ecosystem, the range of views is extreme.
Some see this market correction as a great time to buy the dip.
Others believe this is theend of the partyfor cryptocurrencies.
They believe the same is true ofbitcoin, predicting that the sector will recover.
These moves will not go down well with crypto-enthusiasts.
Cryptocurrencies also facechallengesaroundenergy use, privacy andsecurity.
Investing in cryptocurrencies is like riding a rollercoaster with large appreciations followed by sudden dips.
The major correction in this market has tested the will of even the most avid crypto-enthusiast.
Buckle up because this story is not over yet.
