- The Wharton Professor said that an 80 percent meltdown in the crypto space is still very much possible in 2022.
- He also asked investors to stay wary of the mad rush of investments in Metaverse and Web 3.0.
It’s just the final two weeks left as we bid adieu to 2021, and the crypto market doesn’t look exciting enough for investors. Wharton’s blockchain prof. Kevin Werbach believes that things won’t get any better going into the next year. Werbach predicts a crypto winter coming in 2022 and thus a possible shakeout in the year ahead. In addition, the prof thinks metaverse and Web 3.0 are too early to be real.
The cryptocurrency market has come under severe pressure over the last few weeks. The world’s largest cryptocurrency has seen a 33 percent drop since reaching its all-time high of $69,000 in November. As a result, there’s been a cascading effect for this correction in the altcoin space as well.
Amid this marketwide bearish sentiment, the investment inflows into digital asset products have also slowed to $88 million last week in comparison to $184 million in the week before. Furthermore, the macro headwinds pose a big challenge amid a quicker pace of Fed tapering. Also, there could be faster-than-expected rate hikes in the coming year. Speaking to Business Insider, Kevin Werbach, a professor at the Wharton School of the University of Pennsylvania, said:
Markets don’t go up forever. All of those people who have gotten into crypto in the last two years have only seen a bull market in crypto. And the entire crypto market even back to the launch of bitcoin in 2009 has only happened in the bull market in equities after the global financial crisis.
80% Bitcoin fall possible
Following the crypto bull run of 2017, the BTC price corrected 80 percent in the following year of 2018. However, many crypto mavericks believe that 80 percent of corrections are things of the past considering institutional participation recently.
Werbach believes that 80 percent corrections in Bitcoin and the crypto market are very much possible even today. He added:
When you are in a bubble, and we are clearly in a bubble right now, it’s just impossible to think straight. It’s impossible to recognize that at some point, the bottom will fall out. I don’t know exactly when that’s going to happen, but that kind of shakeout is bound to occur at some point in the crypto market. And then we’ll see what’s real and what’s not.
Metaverse and Web 3.0 are too early to be real
The two concepts of Metaverse and Web 3.0 have picked up pace recently. Besides, crypto projects linked to these two themes have seen tremendous growth over the last two months. Also, there have been tremendous amounts of investment inflows in these two sectors.
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Werbach believes that we are very much in the nascent stage of development and these concepts are too early to be real. He added:
The idea of having a virtual world with assets that people can actually own and that can be integrated and taken across different platforms is a perfect and natural fit for blockchains and digital assets, which are ways to securely represent and record those kinds of assets. So that is coming, but the hype is very much ahead of the reality.
The aspirations and the belief that many people have and the desire for a truly inclusive, participatory, open universe online is a very valid thing. But then you go and look at what’s actually happening. Most of the activity is still financial speculation, most of these platforms are still really immature.
He further noted that investors need to be cautious about looking at investment opportunities here.
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