When bitcoin reached an all-time high price of approximately $68,000 near the end of 2021, as indicated on CoinDesks’ Bitcoin price tracker, experts debated whether the cryptocurrency market would continue its steady rise in 2022. Now, the first quarter of 2022 has ended with bitcoin’s price hovering around $45,000, and those who engage in the cryptocurrency market are considering what the ups and downs of cryptocurrency prices in early 2022 mean for the future of the market. At IM Academy, a leading online financial education platform, students are learning to analyze these changes in the cryptocurrency market and assess how they impact market engagement strategies.
3 Factors That Impacted the Cryptocurrency Market in Q1 2022
The cryptocurrency market is subject to change based on a variety of factors, ranging from the psychological to the political and macroeconomic. Understanding how the interaction of these factors affects market participation and price volatility is crucial when predicting long-term trends and assessing short-term strategies. Here are three of the most significant factors influencing the market so far in 2022:
The cryptocurrency market is relatively new; bitcoin was introduced in 2009 and the first surge in market activity began around 2017. Governments around the world are still in the process of trying to determine how the market can be regulated as it continues to grow.
Announcements of shifts in a government’s policies toward cryptocurrency can significantly impact the market. This was the case in September 2021, when the market dipped following China’s announcement that it would ban the exchange of cryptocurrency.
In the first quarter of 2022, talk of regulation again impacted the market, as the administration of President Joe Biden announced a policy requiring all crypto exchanges to notify the IRS of their transactions, devoted funds to preventing the use of cryptocurrency in ransomware attacks, and advocated for federal oversight of stablecoins tied to the value of the U.S. dollar.
2.) International Relations
The war in Ukraine, which began in March 2022, led to volatility in the cryptocurrency market as market actors tried to determine how economic sanctions on Russia and economic instability in the region would impact cryptocurrency market engagement.
According to CoinDesk, which keeps up-to-date records of cryptocurrency prices and activity, the value of popular cryptocurrencies bitcoin and ethereum dropped immediately following Russia’s invasion of Ukraine, but has since rebounded near the end of the quarter. Wars tend to introduce market volatility in traditional markets, and it appears the cryptocurrency market is not immune to this effect.
3.) Mainstream Adoption
Early 2022 saw an increase in the number of participants in the cryptocurrency market amid a trend of increasing visibility of the market in media and popular culture. This included television advertising campaigns from cryptocurrency exchanges. For example, according to TechCrunch, cryptocurrency apps saw a 279% increase in downloads following a string of prominent advertisements during the Super Bowl in February.
Cryptocurrency also saw endorsements from well-known celebrities in early 2022, including actors, athletes, and musicians, with several releasing their own non-fungible tokens (NFTs).
How IM Academy Students Study the Cryptocurrency Market
At IM Academy, students learn about how these sorts of factors impact market engagement, both in terms of long-term trends and short-term strategies. IM Academy students who are interested in the cryptocurrency market utilize the platform’s DCX Academy, which educates students on the variety of cryptocurrencies available and discusses market strategies based on the unique nature of digital currency exchanges.
IM Academy is designed to provide an online education at students’ convenience, offering readings and videos that can be accessed through the IM Academy portal or app using a smartphone or computer. In addition, students have access to IM Academy educators through GoLive sessions, which enable students to engage in live discussions about market ideas and strategies.
The content in the DCX Academy covers several important areas of cryptocurrency market engagement. Lessons cover topics such as the importance of understanding the ups and downs of the market relative to different time frames, how cryptocurrency relies on blockchain technology, and the creation of candlesticks on cryptocurrency exchanges. IM Academy students learn to understand both the technical side of how exchanges in the cryptocurrency market are executed, and how the market can be influenced by various trends and events.
Studying a Dynamic Market
As the events of the first quarter of 2022 have shown, cryptocurrency is a young market subject to volatility and influence from several angles. Those market participants who understand these angles and can analyze their long-term and short-term impact will be best equipped for market engagement. At IM Academy, students are developing these analytical skills, equipping themselves with cryptocurrency market strategies to understand and adapt to this dynamic market as it continues to mature.
Note: IM Academy is an educational forum for analyzing, learning, and discussing general and generic information related to markets and strategies. IM Academy does not provide personalized recommendations or views as to whether an investment approach is suited to the financial needs of a specific individual. Before deciding to participate in the forex or other markets, you should carefully consider your investment objectives, level of experience, and risk. Most importantly, do not invest money you cannot afford to lose. You should take independent financial advice from a professional in connection with, or independent of, research and verify any information you find on the IM Academy website.
Cryptocurrency-dominated investments may expose you to great risk. Cryptocurrencies are not FDIC-insured, are often not exchangeable for other commodities, are subject to price volatility, and have little to no regulation. Speculating in cryptocurrencies should only be performed by sophisticated investors who are prepared to lose their entire investment.