Horrible news, crypto investors: Prices are still dropping — and they might keep dropping for a while.
Now, analysts for investment bank UBS are warning that crypto markets might be entering another "crypto winter" as prices steadily fall for the asset class, according to a statement sent to investors and seen by Insider.
Bitcoin prices sit at around $42,500 at the time of reporting — a nearly 40 percent drop from its high of $69,000 in November. That’s a fairly steep decline, even for a notoriously unstable cryptocurrency, and analysts expect the floor to go even lower as crypto winter takes hold.
There’s likely a ton of different factors at play. However, UBS analysts believe that there are three main drivers to the price drop.
The biggest is the anticipated rise in interest rates from the Federal Reserve, which has negatively impacted other asset classes like stocks and bonds as well. Goldman Sachs even speculated last week that the Fed might raise rates four times in 2022.
At the same time, many investors seem to be realizing how volatile crypto can be, according to UBS. This is compounded by the limitations of blockchain technology that could make it harder to scale due to its decentralized nature.
Increased regulation is another reason UBS’s analysts believe that crypto is crashing. In fact, they said in the statement that cryptos will "face bigger setbacks from authorities in the coming months." Even some private entities have started to announce that they’ll no longer accept crypto due to its perceived shortcomings and dangers.
All told, it creates the perfect winter storm for cryptocurrencies — and it’s one that might last for a long time.
Of course, this should all be taken with a big grain of salt, since financial analysts have a long and terrible history with making crappy predictions that don’t come true. So it's perfectly plausible that this is just more crypto fear mongering.
Still, you might want to bundle up your investments just in case a long winter hits.
READ MORE: Bitcoin's slump could be the start of a 'crypto winter' that sees prices crash, UBS says. Here are three reasons why. [Insider]
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