While 2021 was considered the golden year for crypto, 2022 wasn’t as kind. Major cryptocurrencies lost over 50% of their value throughout this year during the bear market. Now, it’s hard to imagine that at this time in 2021, Bitcoin was soaring above $60K. Still, the ongoing crypto winter was not unforeseeable, rather, projected.
The crippling financial impact of the pandemic and the Russia-Ukraine war meant that liquidation would be high. To cope with the unprecedented increase in the cost of living, it was evident that traders would quickly drop their most risky assets. In addition, the tightening monetary supply amid rising interest rates meant that volatile assets like crypto would be devalued. Consequently, these forecasts were precisely on point, and as a result, we are seeing this continual bear market.
What’s the silver lining in this? We must understand that crypto isn’t the only economic tool that’s crashing. From liquid currency to stock and shares, every aspect of financial transactions has been affected by the ongoing crisis. But believe it or not, crypto and other DeFi assets like NFTs have exhibited significantly better resilience than other centralized assets during this period.
So, given that we are still in a bear market and about to enter a more severe period of recession, is it a good time to enter the crypto and NFT scene? Let’s see what the statistical trends suggest.
Crypto Shows More Resilience than Stocks
Historically, crypto assets are known for their volatile reputation, while major stocks such as S&P 500 and NASDAQ are considered more stable and low-risk investment options. While this is true on paper, there are fine lines in stock price trends that suggest that tier-1 cryptocurrencies have shown more stability than traditional stocks during this recession.
The Federal Reserve has announced plans to increase the interest rates by another 1.25%, bringing the total federal funds interest rate to 4.25-4.5% by the end of 2022. Higher borrowing costs mean stocks and treasury assets will also decline in the short term. However, given that the treasury already paid 2% raises in advance, the long-term yield
