In 2022, the collapse of the cryptocurrency market has been one of the most significant events in the history of the industry. It has since become the first time that the total market cap of the asset has dropped below $1 trillion. Despite the multiple losses that have occurred, some investors are still optimistic about the future.
A survey was conducted by the Bank of America in June to gather information about the current state of the cryptocurrency market and its potential users in the US. It revealed that over 90% of the respondents would be buying cryptocurrencies in the next six months.
Despite the various losses in the market, the cryptocurrency craze is still far from over. The positive market sentiment means the market is still up-and-coming.
The percentage of people who said they had bought cryptocurrencies in the previous six months was similar to the figure reported in the survey. Most respondents are short-term investors, with over 75% stating that they have held cryptocurrencies for less than a year.
In addition, 30% of the respondents said they would not be selling their cryptocurrencies in the next six months.
During an interview with CNBC, Jason Kupferberg, an analyst at Bank of America, said that the survey results were interesting because they showed that positive sentiment was still prevalent in the market. However, Kupferberg noted that investors should be careful about the reports because the sudden decline in the value of the FUD could cause the cryptocurrency market to fall even further.
“I think today is an example of bad headlines and it wouldn’t be surprising to see another breakdown of crypto stock and the price of Bitcoin itself," said Kupferberg.
Increasing adoption triggers positive market sentiment
According to Kupferberg, the increasing number of people using cryptocurrencies as a payment method is a good sign for the industry.
"Using it as a payment method is interesting for sure, and we think what that's highlighting is the increased use of what we call crypto-to-fiat type products," Kupferberg said.
According to the Bank of America, 39% of the respondents use cryptocurrencies as a payment method online. Another 34% of them use it for in-person transactions.
Although the number of people using cryptocurrencies as a payment method is still not high, it is possible to see more people adopting certain types of products. For instance, VISA is one of the leading payment methods used with cryptocurrencies.
Lowest crypto market cap
The total market cap of cryptocurrencies has dropped below $1 trillion for the first time in over 16 months. This is due to the multiple losses that have occurred in the market. Major cryptocurrencies have also been tracking the stock market's performance this year.
According to Kupferberg, the current landscape of the cryptocurrency industry is similar to that of the internet stocks of the 2000s, where many companies were able to go public, but only a few became successful.
Kupferberg also noted that the number of exchanges in the cryptocurrency market is too high. He said there will need to be a consolidation to reduce the number of platforms.
"The reality is that there are too many crypto exchanges, there are too many cryptocurrencies and tokens," Kupferberg said. "There's going to need to be some sort of consolidation."