Is Now A Good Time For Blockchain Investments?

After deep double-digit slides in Bitcoin and crypto prices in the first half of 2022, this could be the right time to double down on your blockchain investment.

And there are several reasons.

First off, numbers don’t lie. 

In the last decade, when Bitcoin prices soared to 20k in early January 2018 (a record), the digital asset’s profile was brought to the forefront and into the public consciousness. By the end of the 2020s, Bitcoin emerged as the top performing asset, rising by over one million percent. Like Bitcoin, most high-profile altcoins, including Ethereum, XRP, Litecoin, and other top crypto projects, launched after Bitcoin, outperformed traditional assets by several magnitudes.

Interestingly, even after the crypto winter of 2018, which flushed speculators and accelerated the sub-sector’s maturity, Bitcoin emerged stronger during the COVID-19 crisis, lifting the broader blockchain and crypto market, when it soared to peak at $69k. 

With the rise of Bitcoin and DeFi, blockchain gaming, the metaverse, and NFTs, policymakers raced to release laws to foster innovation and encourage integration. By the end of 2021, Bitcoin was already legal tender in El Salvador, and the U.S. SEC had approved the first Bitcoin Futures Exchange Traded Fund (ETF).

Why this is the Right Time to Invest in Crypto

Broadly, crypto enthusiasts and analysts are confident in the success of blockchain and crypto as previewed in three angles:

1. Greed and Fear

Admittedly, crypto and blockchain are emerging subsectors that hold much promise. Bitcoin, for instance, is 13 years old, while Ethereum is seven years old since launching in 2015. Other mainstream crypto projects commanding billions in market cap are relatively young and developing. Therefore, as the scene grows and attracts capital and developers, some investors (traders) tend to speculate, explaining the high volatility. The good news is that unfavorable price swings also attract permanent users, and this adoption is positive. From an investment perspective, the fear following the dump of crypto prices from 2021 peaks saw confidence drop to record lows. However, being a cyclic market, the bottoms may be in as prices bounce from June 2022 lows. In 2018, BTC fell by roughly 75 percent to around $3.2k later that year. The same is being printed at spot rates. From November 2021, BTC crumbled to as low as $17.6k in June 2022, representing a new 75 percent drop. Therefore, if past performance guides, Bitcoin’s medium to long-term projection could be northwards, providing an opportunity for investors to ramp up in anticipation of gains.

2. Whale Wallet Movement

Another indicator of general market confidence is the behavior of long-term coin holders. Whales are institutional or early adopter wallet addresses that hold a large amount of coins. 

In the last seven months, most of these wallets soaked in selling pressure and only recently began accumulating. This was mainly observed in large BTC whales that took a contrarian view after the capitulation in June 2022 and began digging in as fear engulfed the sphere. The same was noted amongst Ethereum and Polygon whales. 

Specifically, a study by Santiment indicated that Ethereum whales, with between 100 and 100k ETH, have been consistently buying since early June despite the sharp downturn that took prices below $900. Another study by WhaleStats found that large coin holders have been doubling their investment on discounted altcoins, spending hundreds of millions of dollars. Since whales are crypto market movers and have been buying in droves, it could indicate that the market could be turning the corner and that there are brighter days ahead.

3. Layer-1 and 2 Developments

Besides tracking whale movements and price action, crypto and blockchain development have been accelerated in the past two years. 

Due to scaling concerns in Ethereum, the most active smart contracting platform, the shift has been to compatible but highly performant and scalable layer-1s, like Avalanche, or Polygon, and layer-2 networks, like Polygon, Metis, Arbitrum, and Optimism. There are noticeable strides made, especially in these platforms judging from the DeFi and NFT activity in general-purpose layer-1 and 2 layers. These attractive platforms offer an alternative to developers and users while generally buttressing the space, relieving Ethereum as it seeks to resolve mainnet scaling issues. 

Notably, even after the crash of 2022, development in prominent layer-1 and 2 networks didn’t halt. In 2018, Ethereum Classic’s development slowed down due to liquidity issues. That development is ongoing despite near 90 percent drops in their asset price is a positive signal that its founders and investors are here for the long haul, providing value.

Blockchain is here to Stay

It may be 13 years since Bitcoin first proved a concept, but the rate of development and private investment in the space is astounding. Blockchain as a revolutionary technology finds application in many industries, subsequently offering investors near infinite opportunities that may promise decent, above-rate returns.