Is Cryptocurrency in a Bubble in 2022

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8 Jun 2022
12

One thing that crypto enthusiasts were right about was inflation.

There has never been an inflation rate this high in the United States, Europe, or the United Kingdom in the last four decades.

In contrast, the performance of cryptocurrencies has been the exact opposite of what was predicted. Even if inflation continues to rise, they have been decimated rather than retaining their value, even falling behind the performance of equities and bonds.

US Treasury bonds, which have fallen by 22% so far this year, have outperformed bitcoin, which is hard to imagine.

According to traditional economic theory, bonds are the most vulnerable asset class to inflation.

Cryptocurrency experts have disproved the assumption that Bitcoin may be seen as digital bullion.

As expected, gold has maintained its value, but the electronic counterpart that has been presented has dropped in value during periods of inflationary pressure.

It's not difficult to deduce what caused this. Investors are abandoning risky and speculative assets in droves after a run of interest rate rises by central banks.

The rise in the value of this electronic asset was spurred by the years of free money given to Americans throughout the pandemic, both financially and monetarily.

Ironically, the first sign of inflation caused by free money was a rise in the price of a commodity being sold as a protection against rising prices. The asset in question was a kind of cryptocurrency.

Cryptocurrency and shares in IT companies that are losing money have experienced a decline in value as liquidity faucets have been shut off because of the epidemic, and cheap money has been withdrawn.

The connection between Bitcoin and the Nasdaq index has hit an all-time high, with the cryptocurrency's value changing in tandem with the index's.

Speculative investments are becoming less enticing as interest rates rise quickly. Investors may now receive returns that are realistic in risk-free government bonds. "Shitco reckoning" is the term used by certain market players.

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