Cryptocurrency may go the way of declining stocks

After the steep drops in cryptocurrency values during the second half of last month raised doubts about its use, experts are optimistic about recovery in the future after some more tumbles due to future Federal Reserve raising of interest rates, the war in Ukraine and Chinas shutdown of crypto.

Leading crypto coin Bitcoin experienced its deepest downturn since last June at $34,636.70 on Feb. 24, and although it was moderated to $39,107 as of March 15, its volatility is concerning to conservative investors.

“Cryptocurrencies are going down because the tide is going up as the stock market is going down,” said Mike McGlone, senior commodity strategist of Bloomberg Intelligence. “Were in a reversion period of the major excesses of inflation of cryptocurrencies in 2021.”

Bitcoin, nonetheless, he said, is showing divergence strength.

Russia‘s invasion of Ukraine territories and the Federal Reserve fighting inflation might show a price reversion in 2022 similar to 2008, according to March’s Bloomberg Commodity Outlook report. When crude oil prices rise, risk assets, such as cryptocurrencies, tumble. As of March 15, the price of Brent crude oil had fallen to $98 a barrel, while petrol prices rose to record highs this week.

“I fully expect more weakness in less risk assets like the stock market, which means it would drag Bitcoin lower, but I expect it to come out ahead,” said Mr. McGlone.

Cryptocurrencies prices have dropped more than 33% to $1.9 trillion since hitting an all-time high of $3 trillion in November, Forbes reported.

Bitcoin increased 119% in January 2021 and Ethereum increased 10%. At the start of 2022, Bitcoin was up 218% and Ethereum had risen 326%, according to Yahoo Finance. Dogecoin experienced an all-time high of $0.68 last May and has progressively tumbled down to $0.11 as of March 15.

Popular hype of the “meme coin” helped rally its price but it has continued to settle down not above $0.35 since last August.

In Miami, Mayor Francis Suarez has championed the use of cryptocurrency as part of the integrated economy. Its pro-business approached has helped bring financial and technological companies to the area. “Florida is a great place to do business,” said Mr. McGlone. “A lot of cryptocurrency [companies] are going there. In terms of crypto assets, theyre less than about 1% of global private equity portfolios, and that ratio just some years ago was a fraction of 1%. I fully expect that it continues to rise.”

Mayor Suarez, he said, is leveraging the advantage of welcoming cryptocurrency uses. “That‘s a good example of some of our leaders understanding the greater risks of falling behind,” he said, “embracing the rapid growth of technology versus the disadvantages of focusing on fossil fuels – like crude oil – and that’s seen with Russia: a lot of this capital that has helped support the Ukrainians is coming through crypto assets, cryptocurrencies, thats the new world.”