Best Crypto 2022

July was the best month for Bitcoin in 2022, but that’s not saying much

July was the best month for Bitcoin in 2022, but that's not saying much

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Cryptocurrency prices have rallied after a terrible June, but we’re not out of the woods yet.


Key points

  • In July, Bitcoin recorded its largest monthly percentage increase this year.
  • Cryptocurrencies continue to face significant headwinds, including broader macroeconomic conditions.
  • Dollar cost averaging can minimize some of the volatility risks involved in buying cryptocurrency.

Cryptocurrency prices had an outstanding year in 2021, but crashed in 2022. Many investors are underwater, meaning their coins and tokens are now worth less than they paid for them. Indeed, many cryptocurrencies have fallen 90% from their all-time highs in what many observers have called “crypto winter.”

In July, Bitcoin (BTC) recorded its largest monthly percentage price increase this year. This happened despite the Federal Reserve’s decision to raise interest rates by an additional 0.75% and fears that the economy could enter a recession. Does this mean the worst is behind us? Has cryptocurrency finally bottomed out? Let’s see.

Best month for Bitcoin this year

After a terrible June, the price of Bitcoin rose 18% in July – the largest percentage increase since the beginning of this year. An 18% gain a month after a 38% loss is certainly better than piling on more losses. But as you can see from the table below, Bitcoin still hasn’t even begun to erase the losses from June.

Moreover, it needs to gain 65% to reach what it was worth at the end of January. The leading cryptocurrency is struggling to reach the $25,000 mark and is worth a fraction of its all-time high. Many analysts remain cautious about August — which has historically been a bad month for cryptocurrency prices. All in all, it’s early and we’re still not out of the woods.

Monthly year 2022 ends for Bitcoin

Month

Price at the end of the month

Percentage change

January

$38,483.13

-17%

February

$43,193.23

+12%

March

$45,538.68

+5%

April

$37,714.88

-17%

May

$31,792.31

-16%

June

$19,784.73

-38%

July

$23,336.90

+18%

Data: CoinMarketCap

What this means for investors

Some investors are hoping that cryptocurrency prices will rise as this will end the stress of watching portfolio values ​​steadily decrease. Others want to buy at a low price, but this can be a dangerous investment strategy. Not only is this almost impossible to do, but it can mean that investors will remain on the sidelines indefinitely, always hoping for a lower price. There are certainly several factors that could cause prices to fall further. But there is also the possibility that some are already included in the price.

For example, we still don’t know what form increased regulation will take or what impact it will have on the market. It may take time to rebuild confidence in the market after the collapse of Terra (LUNA) and several cryptocurrency lending platforms. Finally, we do not know how severe the energy crisis will be in Europe, nor what might happen to the American economy.

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As a crypto investor, instead of focusing on whether this is the bottom, here are two questions you should ask yourself:

1. Do you have money you can afford to lose?

Cryptocurrencies are high-risk assets and prices could fall to zero. This is a relatively new and unregulated market and there are no guarantees as to how it might work. As a result, the golden rule of crypto investing is to only spend money you can afford to lose. Try to ensure that cryptocurrencies only represent a small percentage of your total investments. That way, you can benefit if prices skyrocket, but you won’t be ruined if prices fall.

Before you open an account with a top crypto exchange, address your other financial goals like saving for retirement, building an emergency fund, and paying off debt. Don’t prioritize investing in crypto over building a financial foundation that will help you build long-term wealth.

2. Do you believe in the long-term potential of Bitcoin?

If you’re investing for the long term, you’re less likely to lose sleep over short-term market fluctuations—even if those fluctuations are dramatic. Take the time to explore why people think Bitcoin could outperform other assets, as well as why others remain skeptical. That way you can make your own decisions. If you’re optimistic about Bitcoin’s potential over the next five, 10 or even 20 years, now might be a good time to invest. Prices may drop further, but they are still low compared to what we saw last year.

One way to minimize risks is to use dollar cost averaging. This involves breaking up your investments into smaller amounts at specific intervals. For example, let’s say you want to buy Bitcoin and you have $500 to spare. You can split it into five $100 worth of BTC purchases each month instead of spending $500 in one lump sum. That way, if cryptocurrency prices drop again, you’ll pick up something at a lower price. If prices go up, you’ll buy something before they go up.

The point

It’s easy to get carried away with an 18% monthly price increase, but the broader macroeconomic factors that have contributed to cryptocurrency losses are still at play. If you decide to buy cryptocurrencies, consider ways to protect yourself from risk, such as making sure it’s part of a diversified economy and using dollar cost averaging to hedge against volatility.

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