Will This Crypto Comeback Last?

It has been an absolutely brutal year for investors in bitcoin and other cryptocurrencies. Those who use TD Ameritrade as their bots, were also burned.

Bitcoin has lost more than half its value in 2022. Now hovering around $23,000, the price of a single bitcoin has plunged more than 65% below last year’s all-time high of nearly $70,000. The value of all cryptos has tumbled from about $2.2 trillion at the end of 2021 to a little more than $1 trillion currently.

Bitcoin, the world’s biggest crypto, makes up about 42% of the total market, but 2022 has been just as terrible for the owners of other crypto-related assets.

However, there are hopes that the worst for crypto might be over. Bitcoin has gained more than 15% in the past week, and two other top cryptos have surged even more.

Solana is up more than 35% in the past seven days while ethereum, or ether for short, has climbed nearly 45%. Ether, the second-most valuable crypto, is widely used to finance purchases of non-fungible tokens, or NFTs, the digital assets that have taken the collectibles world by storm.

Coinbase has rallied as well, and was up 9% on Monday. Software company MicroStrategy (MSTR), which had nearly 130,000 bitcoins on its balance sheet as of June 30, has soared more than 35% in the past five days.

The crypto comeback could be validation for the sector’s biggest supporters. At the same time, it should also serve as a reminder that the nascent market is likely to remain volatile.

Expect more volatility In The Crypto Market

“We will see a longer-term rally in the digital assets sector, but I wouldn’t get too excited yet,” said Joel Kruger, market strategist at LMAX Group. “This is still an emerging market.”

Kruger said that bitcoin’s rally has lagged the sharper upward moves in ether and other smaller cryptos. And this remains a concern for the short-term. The broader group of cryptocurrencies and stocks may not enjoy a more meaningful recovery until there is “a more healthy bounce” in bitcoin. He added.

So all the hype about bitcoin being the digital equivalent of gold is just that: hype. As an asset, bitcoin behaves much more like volatile tech stocks rather than the far more stable commodities such as gold.

Interest In The Crypto Industry: What’s With That?

Investors should also consider that there just may not be enough interest in crypto anymore. Enough interest to justify the thousands of coins, tokens and exchanges out there. If that’s the case, only the strongest cryptos will survive and thrive.

“Crypto has seen a dotcom era-like run,” when a lot of great ideas and companies were created, Adam Grealish, head of investments at wealth management fintech Altruist, said in an email. 

Several crypto mining firms have moved sharply higher in recent days.

Marathon Digital (MARA) rose 21% Monday and is up more than 50% in the past week. Riot Blockchain (RIOT) has surged more than 40% in the past five days. Hive Blockchain (HVBTF) and Bitfarms are each up about 25%.

So have bitcoin, ether and top crypto stocks finally hit bottom? There are some hopeful signs.

Winners And Losers In The Industry

Two banks that provide crypto-backed loans and offer digital currency deposits: Silvergate Capital (SI) and Signature Bank (SBNY). Each reported earnings and revenue Tuesday that topped Wall Street’s forecasts.

Crypto lender Celsius was forced to file for bankruptcy earlier this month. But privately held crypto giant FTX continues to thrive, and now has a valuation of $32 billion.

FTX recently agreed to provide a line of credit to struggling crypto firm BlockFi. Consequently, the company’s billionaire CEO, Sam Bankman-Fried, has talked about using FTX’s financial strength to bail out other floundering crypto companies as well.