Why a large number of crypto assets may experience losses in 2022: Arthur Hayes, a well-known figure in the cryptocurrency business and former CEO of BitMEX, has issued a warning that all crypto assets except Bitcoin and Ethereum could suffer significant losses.
Hayes stated in his report that if Bitcoin and Ethereum go below $30, 000 and $2, 000, respectively, in the months ahead, he will consider selling all of his other crypto assets, as the losses might be catastrophic.
“I’m going to sell all of my shitcoins if Bitcoin falls below $30K and Ether fall below $2,000 in the next three to six months.” Bitcoin and Ether are among the best coins accessible now, which means they will drop at a slower rate than the rest of their unproven competitors.”
Additionally, gravity will be stronger than 9.8m/s for any applications that utilize the Bitcoin or Ether blockchains. Without the crypto risk, these altcoins may fall by 75% to 90%,” Hayes added.
Additionally, Hayes indicates that he may reconsider the value of Bitcoin and Ethereum if they fall below their prior bull market highs.
“If Bitcoin falls below $20,000 or Ether falls below $1,400, I’ll worry if these cryptos can sustain in terms of energy expenses,” he remarked.
“It was at these two levels that the bull market of 2017 broke out to new all-time highs. What counts is the fiat price; who cares if oil prices fall again? If the benchmark cryptos lose value as a result?”
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As of the time of writing, Bitcoin was trading at $42K on the FTX market, down 21% from its 30-day high of $50.8K, while Ether was trading at $3,134, down 35% from its 30-day high of $4.1K.
Additionally, Bitcoin may face negative pressure if Wednesday’s US inflation report is stronger than expected.
Consumer prices are predicted to increase 7.1 percent year over year and 0.4 percent month over month in the months through December, according to the widely followed consumer price index (CPI). As a result of this rise, officials at the Federal Reserve in the United States are pressing for more rapid normalization of monetary policy than previously anticipated.
Crypto assets being at the riskiest end of the risk curve, and having profited from the Fed’s “extraordinarily lax” monetary policy, it’s fair to anticipate them to suffer as money is shifted into safer assets by an “unexpectedly tighter” policy.
Bloomberg Intelligence’s senior commodity strategist Mike McGlone, meanwhile, stated that $4OK represented a critical support level in the Bitcoin market. Additionally, he believed that as the world becomes more digital and BTC is used as collateral, the pioneering cryptocurrency would finally exit its bearish phase.
So far we have been able to see reasons why crypto assets may experience losses.