How Important is the $1T Mark for Crypto?

The rise of cryptocurrency has been fast. Fifteen years ago, no one had heard about blockchain, let alone digital coins, which could be bought and traded across a decentralised network with no need for any banks or middlemen. 

It was, in many ways, a bullish ideology which was morphed into reality by the users who participated. Today, Bitcoin, Ethereum, and an estimated 20,000 other tokens across the world are only growing in popularity, and with dApps and NFTs forging their own identity within the crypto market, the only way is up.

Digital And Emotional Fragility

It would be suspected, then, that the investors who participate in the market should have a certain confidence about the ground they stand on. With cryptocurrency’s volatility, however, this couldn’t be further from the truth. 

Nearly a year ago, in November 2021, Bitcoin hit an all-time high of $69,000. A few months later (in June 2022), it had fallen as low as $18,000. The price of Ethereum, which is the second-highest coin in the market, has similarly seen a shake in value. Overall, this is due to a highly volatile market, which can flip on its head due to a number of things, including supply and demand, government regulations, media hype, as well as investor sentiments. 

In many ways, the entire crypto landscape is fragile. If a particular number of investors swing from one branch to the other, then the whole tree is shaken, causing coins to fall any way they choose. Even for the most seasoned of investors, this is unsettling. Despite predictions about where crypto is heading (as well as the meteoric rise it has experienced over the last decade), investors cannot help but make rash decisions, basing their sentiments on the here and now rather than past trends or future predictions. 

The Crypto Winter Is Dark 

This has been particularly notable over the last few months when the cryptocurrency market has been creeping into its second crypto winter. This is a period recognised in the traditional stock exchange as a bear season. Put simply, internal and external turmoil (such as the Tether and Terra de-pegging incident in the middle of the year, as well as recent inflation concerns) have caused coins to drop across the market, with no indication about when - or if - they will return to form. 

Many investors have been disturbed by this, with some either reducing their holdings or selling off their investments completely. With the last bear market lasting around two years (from 2018 to 2020), it is unclear exactly how long this one will go on. If external pressures remain the same, then it could carry on even longer than the last one. 

Of course, that isn’t to say sentiments are the same for every investor. For some, a sustained period of desolation gives an opportunity to catch out ineffective start-ups and increase the weight of opportunity for more savvy businesses. But even for these more confident investors, a crypto winter is not an ultimately positive experience. In real terms, returns on investments have plummeted, and most market swings are ineffective in bringing them back. Also, in a broader sense, the promise of cryptocurrency looks – legitimately or not – in a certain amount of turmoil. This is exemplified by the ongoing effort to hit the $1T mark. 

All Eyes On $1T

First achieved after a surge of rallies in January 2021, the $1T mark represents a symbol of where crypto is heading. As mentioned previously, cryptocurrency is a revolution that has taken only a few years to grip the world. If predictions are to be believed, it will become a prominent feature in the decentralised landscape of Web3, which is due to launch around 2030. For investors today, the thought of crypto actually fulfilling those predictions is tantalising, hence the reason the $1T mark is so anticipated. 

On September 27^th, 2022, that anticipation was finally rewarded. It was the price of Bitcoin which ultimately tipped the scale in crypto’s favour, as it just about managed to reclaim a value of $20,000. This was a rise of 6.4% in less than 24 hours, with Ethereum also experiencing a positive turn as it rose 6.3% to $1,382. Other notable gainers involved alt-coins such as Solana (rising by 5.3%), Polkadot (rising by 6.2%) and Uniswap (which rose by as much as 16.2%). 

Celebration Relieves Tension

For investors in the market, there is a hope that this might spur on a new bull season, but, realistically, the celebration of $1T is more of a way for investors to relieve tension. As mentioned previously, cryptocurrency is a fragile landscape, with a potentially revolutionary future underlining volatility which, at times, makes that future hard to believe. Any indication that the wheels are back on track is going to be met with excitement, especially when there is so little to celebrate in the market as a whole. Just before the $1T mark was hit, for instance, Biden’s administration released a framework which looked to grant the power of cryptocurrency to the same authorities who control traditional finance. This could ultimately lead to a centralisation of what is, by nature, a decentralised network, which would damage the innovation and promise of blockchain going forward, especially in the lens of Web3 and the metaverse.

With these kinds of issues (as well as others that are facing the crypto market at the moment), it is fair to give the small victories a moment of celebration. A victory such as $1T is relatively inconsequential, especially if one was to look at the state of crypto just one year ago, but it is still a positive sign. It reveals a gust of wind which has lifted crypto’s flame and reinforced a certain optimism about its future.  

No matter how fast or brief, this is an important moment that should be noted amongst investors, especially those unsure of the way forward. There are still plenty of opportunities for seasonal winds to blow, but in the darkness of the crypto winter, investors should be even more glad that there is still a flame to meet them.