The cryptocurrency market seems to be recovering after an earlier correction that can only be compared to the declines that occurred in May 2021. Today, sentiment seems to be improving, network computing power seems to be at its highest ever, and global firm KPMG is investing in bitcoin and ethereum.
In May 2021, the price of bitcoin fell from about $64,000 to below $30,000, a drop of about 54 percent, while the price of ethereum dropped from $4,350 to $1,719, a 60 percent correction. Since then, both BTC and ETH have still managed to set new all-time highs in November 2021. For bitcoin, it was around $69,000, while for ethereum, on the other hand, it was close to $4900.
Prices rebounded from the bottom by 30-40 percent
The end of 2021 and the beginning of 2022 again brought massive declines in cryptocurrency prices. Investors and speculators probably did not count on a repeat of last spring. Nevertheless, history repeated itself and both BTC and ETH in dollar terms made very similar corrections to those of the spring. In percentage terms, the price of bitcoin fell 52 percent, below $33,000, while ethereum fell 55.5 percent, to $2161.
Now, from the aforementioned lows, BTC has already rebounded by about 31.6 percent, to $43,500, while ETH has rebounded by more than 40 percent, to about $3,100. What seems significant here is the recent news of cryptocurrency adoption and purchases by one of the more established companies in the world.
Will cryptocurrencies become a common asset?
KPMG (which provides audit and financial advisory services) has purchased bitcoin and ethereum for its company balance sheet. According to company officials, cryptocurrencies are a maturing asset class. Investors - including hedge funds, family offices, large insurers and pension funds - are increasingly gaining exposure to cryptocurrencies, and traditional financial services such as banks, financial advisors and brokerages are exploring offering products and services that include cryptocurrencies.
This investment reflects the belief that institutional adoption of cryptocurrencies and blockchain technology will continue to grow and become a regular part of the asset mix, KPMG stated in a release. It added that the cryptocurrency industry continues to grow and mature and therefore must be considered by financial services and institutional investors.
Exchange rival cryptocurrency miners
The trails in BTC purchases on the company's ledger were blazed by MicroStrategy, which holds more than 125,000 bitcoin, followed by the high-profile purchases of Tesla, which spent $1.5 billion on BTC. It's also worth noting that an ETF that invests in bitcoin mining companies debuted on the Nasdaq exchange yesterday. This could mean interesting competition for investors, for example, investing in ETFs that have exposure to gold mining companies.
Therefore, it seems that 2022 may be a very interesting year in terms of possible increasing interest in the cryptocurrency market by corporations, and as a result, we may also see the approval of the first US ETF for bitcoin.
Daniel Kostecki, Director of the Polish branch of Conotoxia Ltd. (Forex service)
Materials, analysis and opinions contained, referenced or provided herein are intended solely for informational and educational purposes. Personal opinion of the author does not represent and should not be constructed as a statement or an investment advice made by Conotoxia Ltd. All indiscriminate reliance on illustrative or informational materials may lead to losses. Past performance is not a reliable indicator of future results.
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