- There has been a change in crypto investor sentiment at the start of 2022.
- The market has moved from fear to extreme fear and back since last month.
- Prevailing trends include investing in cryptocurrencies with strong fundamentals.
The start of this year has been drastically different from the last as far as the crypto market is concerned. 2021 began with the same fire that ended in 2020 when Bitcoin broke through its previous all-time high of $19,600 and immediately began to skyrocket. In fact, Bitcoin’s price almost doubled between the start of January 2021 and the middle of February.
2022, however, has been a polar opposite. The market began to slow down at the start of December last year, and that bearish momentum has refused to let up. There are signs of recovery here and there, but the general market sentiment remains a very bleak one.
A simple check of the Crypto Fear & Greed Index will explain where the market is right now. Investors have moved from fear to extreme fear and back over the past month, showing that there doesn’t seem to be hope for market gains insight.
The changes in investor sentiment are easy to see. Unlike last year, 2022 has been much slower on the development front as companies are focusing on protecting themselves and waiting out the crypto winter. At the same time, exchanges, trading platforms, and other companies that are fundamental gateways into the crypto market hope to shore up the market and at least offer their fundamental services. Nothing fancy, but it works.
So, what are the trends that investors are showing right now?
Focusing on the Coins With Track Records
In market slumps like these, it is usually safe for most investors to hop on large-cap coins that have been around for a while. So, assets like bitcoin and ether become hot-ticket items. This doesn’t necessarily mean that their prices will increase. However, gains in the prices of these large-cap coins are expected to trickle down to the smaller ones.
Currently, Bitcoin’s dominance over the market stands at 42.6%. The metric was dropping towards the end of last year when prices were still relatively good, showing that investors were more willing to diversify and explore other assets. Now that the market appears to be in a downturn again, everyone’s running to the coin they know will always be here – Bitcoin.
It’s understandable. Even in times when the traditional market sees a slump, the best thing for most investors is to find assets that have proven track records and stay with those.
Another common trend right now – especially among industry players – is the focus on growing and building.
Even as the market continues to slump, crypto activity isn’t necessarily down. At the same time, crypto companies are also doing their best to grow as they believe in keeping their operations running in the long term. If they hope to improve their standing in the industry, there’s a need for them to effectively grow. And, they so far have.
Big names like Ethereum and Solana are expanding and looking to conquer new ground along the way. More companies are adopting Bitcoin as they believe it has the possibility of becoming a force in the payments space. And so on.
All of these moves have the same goal in mind – either spark the market recovery or be in a good position to benefit when it eventually comes.
Recently, a report from BDC Consulting highlighted the fact that a lot of investors tend to do more research when considering blockchain projects. The report explained that blockchain companies and projects will need to show resilience in their technologies – as well as partnerships that can propel them forward – if they hope to attract new investors. In more ways than one, this is what many projects are currently doing.
There’s an old saying that market dips are when we get to differentiate investors. Hardly does any market embody this truth like the crypto space.
When 2021 rolled by and coins were skyrocketing, people continued to throw money at the market. But, now that things appear to be slowing down, it’s a different case. Everyone’s shoring up so they can protect themselves.
Times like these are especially great for long-term investors. These people understand the value that the market has, and they’re willing to keep their holdings for the long haul. When the market dips, they see it as an opportunity to buy even more.
The Old-Timers Have Been Here Before
Not so disconnected from the previous point, there’s also a relative familiarity that this slump has – especially for people who have been here since 2017. When the market was rosy and funds were rolling in, everyone had fun. But, the market flat-lined and proceeded to shed about 80% of its value.
Now, we’re seeing something similar. It’s not as bad as an 80% drop, but coins are on the drop regardless. Investors who were here for the previous crypto winter understand that this is just a phase, and they’re willing to make better decisions than they made in the past.
So, while newbie investors are selling off in a panic and moving their money to other relatively less productive assets, these old-timers understand what is happening and are simply biding their time.
It’s easy to see the market’s performance over the past few weeks and believe that things couldn’t get worse. But, this is only for those taking short-term views of the market. The truth is that the market’s fundamentals are strong right now, and investors who have some experience will be the first to tell you they’re not going anywhere.
Right now, we’re seeing different shifts in investor sentiment as 2022 continues to bring its set of challenges for the market. However, with the right perspective, you should be able to put yourself in a position to benefit in the long run.
Disclaimer: The views and opinions expressed in this article are solely the author’s and do not necessarily reflect the views of CoinQuora. No information in this article should be interpreted as investment advice. CoinQuora encourages all users to do their own research before investing in cryptocurrencies.