Opportunities of the Crypto Market at the End of 2021: Relevant Prognoses

By Mitch Rice

The cryptocurrency market seems to have met a limit in May 2021. After an incredible start-of-the-year rally that allowed hundreds of cryptocurrencies to register +3000% gains, the market literally crashed before our eyes. 

This left investors that were using services to buy Xrp or Bitcoin worried whether there was some steam left in this market. The predictions that Bitcoin would reach six figures by the end of 2021 seem far off now. But will the market be able to recover in any shape and bring some opportunities for investors?

To answer this question, in this article we will briefly explore the reasons why the market crashed. Additionally, we will try to analyze some of the reasons that could reverse this bearish trend and allow Bitcoin and peers to regain their lost value. 

Why did the market crash?

In a volatile market like cryptocurrencies, there’s never a single reason that makes the market sway in one direction or the other. Instead, there is a combination of elements that can bring it to a breaking point, which can happen when even the greatest experts expect it the least. Let’s have a look at what really happened prior to the market crash that brought most of crypto down by 50% or more. 

  • Bitcoin’s sustainability problem – while Bitcoin’s high energy consumption is a known problem, Elon Musk’s allegations concerning this issue made the problem even more public. 
  • Ethereum’s high gas fees – because of the increased popularity of the market, Ethereum’s network became congested and transaction fees went through the roof. This put a halt to the growth of the DeFi ecosystem, not allowing promising projects to reach their full potential. 
  • China banning cryptocurrency trading and mining – to support their upcoming CBDC, the Chinese government initiated a crackdown on crypto trading and mining. The latter caused mining operations to have to relocate to other countries or shut down completely. 
  • Increased regulation over the world – finally, because of the increased valuation of cryptocurrencies in general, many countries like India and Turkey took upon themselves to control the market by imposing stark regulations and bans. 

While these reasons aren’t the only ones that contributed to the crypto crash of May 2021, their combination allowed the market to tip into bearish momentum. 

What could reverse the current slump?

To be fair, the market doesn’t look good at the moment. Even long-term bullish analysts are saying that the price of cryptocurrencies might keep falling in the near future. Technical analysis confirms that we’ve already entered a bear market, with the price holding strong below the weekly moving averages on the daily charts. However, there are still some important events in the cryptocurrency ecosystem that could help reverse this trend and help the market regain some positive price action. 

  • The Ethereum London upgrade – this vital update to the Ethereum network will decrease the gas fees and turn the ETH token into a deflationary currency. Because so many projects depend on Ethereum, this could help the entire DeFi ecosystem regain some speed and many tokens should increase in price in the process. 
  • Miners relocate successfully – once the miners relocate to other countries than China, Bitcoin mining could become much greener, using sustainable energy. Moreover, this could help with the decentralization of mining out of government-controlled China. 

Best opportunities for 2021 in crypto

Bull or bear market notwithstanding, there are still some surefire opportunities in the crypto market in the short, mid, and long terms. Below are some of the best ways you can make money in crypto by the end of 2021. 

  • Swing trading – the market is very volatile right now, but this volatility and price movements can be predicted using sound technical analysis. By using short-term swing trading, you can take advantage of these market movements and start making profits by buying at low prices and selling once they reach their peak. 
  • Bitcoin shorting – again, if you are following the news closely and can combine this with some good trading analysis, you could short Bitcoin. This means that you would bet on Bitcoin’s price going lower and make profits from it. 
  • Invest in NFTs – non-fungible tokens are all the rage and seem to be conserving their value no matter how the market is performing. Whether they are art or gaming tokens, investing in NFTs could be a good opportunity to make some profits quickly. 
  • Keep an eye on the DeFi market – with important actors like Cardano entering the ecosystem, decentralized finance tokens could surge in value in the upcoming months. 

Conclusion

It’s true that the cryptocurrency market has seen better days. With that said, there are still some great opportunities and profits to be made if you are savvy enough. Learning technical analysis to better understand and predict market movements should be one of the first things you do if you wish to profit from crypto in a downtrend. Even so, remember that crypto works in cycles and will eventually return to its former glory.