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The Crypto Winter looms even as Bitcoin’s price shows signs of stabilising and resurging. Read on to discover more.
Bitcoin is routinely in the spotlight, due to its position as the inaugural and most prominent cryptocurrency. It’s the most expensive, most owned, and most used for payments. Under this spotlight, it acts as a representative of the crypto scene as a whole, indicating where its heading and where it is.
In November 2021, Bitcoin hit a record-setting $68K as the wider crypto market amassed a $3T total market cap. Ether, Doge, and other altcoins rode this wave of investor interest and confidence, while NFTs showcased the potential for blockchain applications in new areas of ownership and expression. The mood was bullish. Since the turn of the year, though, the de-pegging of notable stablecoins, collapses of projects like Terra, and the wider struggle of the larger macro-economic backdrop has caused crypto’s price to decline steeply, wiping out all the grounds gained in 2021, ushering in the Crypto Winter in June 2022. This bear market, though, by all indications and in terms of percentages, is not as severe as those which have come previously – in 2011, 2015, 2018, and 2020.
Does This Market Have a Different Mood?
There’s a different set of conditions and mood within this bear market in comparison to others. Ground gained in 2021 attracted the attention of notable companies like Tesla and proved to notable figures like Tesla’s Elon Musk and billionaire Mark Cuban how viable crypto can be for payments and storing value, and, also, how viable blockchain is for various potential applications. (Cuban is an outspoken advocate for crypto and blockchain, being vocal about his investments in various coins and projects, sitting on the NBA’s blockchain advisory board, and implementing blockchain-based solutions as willingly and sensibly as possible within his NBA franchise, the Dallas Mavericks.) Not only this, investors witnessed the scale of bitcoin’s potential as its price hit $68k. As a result, whales, tech-solutionist entrepreneurs, traders, and amateur investors grew the community of crypto users who were increasingly stubborn and optimistic about crypto’s future. While, yes, many of those conducting transactions hourly and daily are in it for short-term gain, 2021 saw many become believers in crypto’s long-term use.
Bitcoin Supported By Big Money and Big Companies
This view of crypto was evident during this latest bear market – the Crypto Winter – in more than just talk, though.
The End of the Crypto Winter
This Crypto Winter saw notable losses to the crypto market. High-profile projects like Terra collapsed, as have Celsius, a crypto lender, and Three Arrows Capital, a crypto hedge fund, while exchanges and other crypto-based start-ups and companies lost value and liquidity – some filing for bankruptcy – and reduced their workforce.
This winter has by no means been just about crypto losing value in isolation. However, as stated above, the mood was bullish, even if the market wasn’t. Those bullish saw this latest plunge as a ‘weeding out’ of weak hands, those who baked too much risk into their operations, which is better for crypto’s future.
Economic forecasts looked rosier as interest rates and inflation adjustments were favourable to risky assets, bolstering the appetite to begin investing in crypto again, contributing to bitcoin stabilising towards the end of 2022. Crypto assets are also following the stock market, tracking closely, which many see as a good sign. Additionally, even when negative events occurred and the news was released, the market didn’t react negatively, further reinforcing that the crypto market had found its local bottom.
Heading into 2023, the wider market continues to maintain value. Ether’s price, in particular, has held steadily since the merge was completed. Despite talk of recessions in major economies, the expectation is that, while it's impossible for crypto prices to hit previous heights in the near future, north of $30k is possible in the new year, especially if institutional interest becomes action.
DISCLAIMER
This content does not constitute investment advice, financial advice, trading advice or any other type of advice and should not be considered as such; zondacrypto does not recommend buying, selling or owning any cryptocurrency. Investing in cryptocurrencies involves a high degree of risk. There is a risk of losing invested funds due to changes in cryptocurrency exchange rates.