January has been a rough month for the cryptocurrency market, and according to data from TradingView, the global cryptocurrency market cap has lost approximately $500 billion this month, tumbling from around $2.2 trillion to $1.7 trillion today.
January is not the only weak monthly performance crypto investors have endured, and in December 2021, the market weakened by more than 15%.
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The cryptocurrency market also suffered a big crash in May 2021 amid concerns of China’s Bitcoin mining ban and an over-exhausted environment. While the May crash was the most severe the market has seen for some time, this month’s performance looks set to go down as crypto’s worst January on record.
The U.S. central bank signaled interest rate hikes starting in March and a shift away from pandemic-era economic support measures. In such conditions, risk-on assets tend to suffer as the cost of borrowing money becomes more expensive.
International Monetary Fund (IMF) also warned that cryptocurrencies pose new challenges to financial stability. According to IMF, the impressive growth of cryptocurrencies in the last year has come with the unintended consequences of a “contagion across financial markets.”
Bitcoin has lost about 45% of its value compared to its all-time high, but Brett Harrison, president of FTX US, said that he believes that Bitcoin prices will remain volatile in the foreseeable future. Brett Harrison added:
The influx of capital, new companies, and infrastructure around the cryptocurrency market mean they are still optimistic about the future. I think until there is more institutional money coming into crypto, we are going to continue to see markets be somewhat unstable in terms of their volatility.
Harrison also said that he believes this will not be a long crypto winter, and the influx of institutional interest would eventually positively impact the price action.
Time to invest in cryptocurrencies?
If you decide to invest in cryptocurrencies in February 2022, you should have Bitcoin on your “watch list” because the prices of other cryptos are usually in correlation.
Bitcoin is trading above the $38000 level this Monday, indicating that the price could soon test the $40000 level. If the price breaks the strong resistance level that stands at $45000, it would add a boost to the whole cryptocurrency market.
According to analyst Michaël van de Poppe, this could be the end of the mini-bear cycle, and he believes that Bitcoin will remain in a bull market until third-quarter 2023.
Many institutions started to look at cryptocurrencies for being an excellent store of value, while Mike McGlone, Senior Commodity Strategist at Bloomberg, said that he believes that 2022 will be a successful year for Bitcoin and other cryptocurrencies.
Summary
January has been a rough month for the cryptocurrency market, and according to data from TradingView, the global cryptocurrency market cap has lost approximately $500 billion this month. If you decide to invest in cryptocurrencies in February 2022, you should have Bitcoin on your “watch list” because the prices of other cryptos are usually in correlation.
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