When cryptocurrencies make the news, it’s either because something really great or something really bad is happening in the market. Unfortunately, over the past year, crypto’s presence in the media was dominated by the latter. If you’re up to date with what’s going on in the crypto sphere, you probably know that the bad news has to do with the crypto winter, which, according to the experts, started sometime between late 2021 and the middle of 2022.
A series of unfortunate events marked this period of time. Cryptocurrency prices started to drop across the board, beginning with the biggest players in the field, like Bitcoin and Ethereum and ending with smaller coins and newcomers, some of which have lost most of their value or have completely disappeared from the market. The collapse of TerraUSD and LUNA coins added fuel to the fire, and then FTX’s fall from grace was the cherry on top. In all the hustle and bustle, Ethereum’s merge provided one of the few bright spots in cryptos’ recent history.
All in all, it wasn’t exactly what investors and traders had imagined 2022 will look like. People had gotten used to cryptocurrencies getting bigger and better, breaking boundaries and climbing to all-time highs, when all of a sudden, the winds changed direction, and everything went south. However, it’s not all doom and gloom as some make it out to be. Although there’s less activity in the market, platforms like Binance still get a fair share of traffic, with people constantly checking Bitcoin or Ethereum price and placing trades in a more cautious manner. Also, let’s not forget that this is not the first, nor will it be the last crypto winter to shake up the charts and mess up investors’ plans. The cryptocurrency market is cyclical and digital currencies have gone through similar phases in the past, growing stronger after each setback.
So, naturally, people are now wondering if or when cryptocurrencies are going to recover. While experts’ opinions are divided, there may be a glimpse of hope after all.
Looking at the leaders
Although it’s impossible to make accurate predictions regarding crypto movements, there are a few things we’ve learned from the industry’s evolution over the years. Apart from the cycle of rise and decline that cryptos go through regularly, we also know that the market follows the lead of the most established coins. As the most popular and valuable digital currencies in existence, Bitcoin and Ethereum are the ones that set the tone in the crypto space. Therefore, if Bitcoin and Ethereum get back on track, it’s very likely they will pull along all the other coins in the market, and the industry will eventually get out of the deep and dark winter.
But when can we expect these two coins to begin their ascension? Well, experts believe that Bitcoin’s upward trend might be just around the corner, and they have some solid arguments for it. Historically, Bitcoin’s cycle has been dictated by halvings which take place once every four years. This is a pre-programmed feature that cuts the reward for mining Bitcoin in half in order to control the number of coins released into circulation and ensure scarcity. Usually, Bitcoin reaches its lowest level approximately one year and a half before each halving. Then, after the halving happens, prices start to rally up once again, propelling Bitcoin to new all-time highs. These patterns repeat themselves over and over again, leading to consecutive bear and bull runs.
With the next halving expected to take place between March and May of 2024, this means that Bitcoin has already hit the bottom, and now we can expect things to calm down. So, even if Bitcoin is still far from the next bull run, even the pre-halving period can bring good news, which means that 2023 will probably be a recovery year for the cryptocurrency market.
Recent price figures also support this optimistic outlook. Bitcoin started the year on the right foot, reaching the highest levels since August 2022. The setbacks over the past few weeks were minor, leading analysts to believe that the positive trend might continue in the months to come.
Looking over at Bitcoin’s most prominent contender, Ethereum is also showing signs of improvement. The coin increased in value by up to 2,4% in the first month of the year, so we can hope that the worse has passed for Ethereum as well. Besides, the Ethereum merge that was completed last year, boosting the network’s sustainability, has also increased its prospects of adoption. With more investors adding Ether to their portfolios, the coin’s price is bound to increase, so the future looks quite promising for Ethereum.
Caution is still the best advisor
Although there are plenty of reasons to be optimistic, experts also warn that the cryptocurrency market is not out of the woods yet. The impact of the events that marked the crypto space in 2022 is still being felt by investors and traders at large. Many have suffered substantial losses, and those who got away unscathed are reluctant to take risks at the moment. So, even if fluctuations in the market have calmed down and certain cryptocurrencies have been performing better recently, it doesn’t mean things will improve overnight. It will take some time before people feel confident again in using crypto as an investment vehicle.
For a while, things will probably continue to move slowly in the crypto market, as caution is the best policy in times of uncertainty. But the fact remains that digital currencies are not going anywhere, just as they didn’t go extinct during previous crypto winters. This one might be a little colder than expected, but let’s not forget that cryptocurrencies have enjoyed massive support in recent years from businesses and institutions, and that has helped consolidate their image as viable financial instruments.
Judging both by past performance and recent developments, we can hope that 2023 will be a milder year for the cryptocurrency industry. The bull market might not be on the horizon just yet, but at least we can look to the future with optimism and wait patiently for the market to recover.