For the cryptocurrency market, 2022 was absolutely awful. It’s been a pretty depressing year for Bitcoin and other leading altcoin projects. The Fed’s battle against inflation was the main reason for such a sharp decline in cryptocurrencies. However, it’s not just him. The last 12 months have been filled with crypto meltdowns, bankruptcies and chaos. So the losses shouldn’t surprise anyone. The question now is whether all this market chaos will continue in 2023.
How long will the crypto winter last?
The crypto market is no stranger to boom and bust cycles. A quick glance at Bitcoin’s price history, a benchmark for the entire industry, is enough to explain it. In 2018, after a meteoric rise to nearly $20,000, BTC fell 84% to $3,000. BTC bounced back and rose to around $17,000 in November 2020, then rallied even higher. In May 2021, BTC fell 50% before hitting all-time highs of around $69,000 that year.
Many analysts say this pullback is different, thanks to the struggles of the broader economy. David Kemmerer, CEO of CoinLedger, explains:
The ongoing crypto winter may last longer this time. This is due to current macroeconomic factors. We currently have the highest inflation in 40 years. Also, borrowing costs are rising and there is political instability after Russia’s invasion of Ukraine.
Bitcoin has only existed since 2009. So, it entered the market after the Great Recession. Due to its short history, crypto market downturns have not coincided with a bear market in the broader financial space until recently. Financial markets experienced a long bull market from 2009 to the end of 2021. However, it was briefly interrupted by the Covid-19 pandemic recession of early 2020. In fact, the stock market has opened more than seven times this year from its March lows, surprisingly.
But the dual headwinds of high inflation and Fed rate hikes have thrown both the stock and crypto markets a punch or two. Because risk assets like stocks and crypto suffer when interest rates rise. To answer the question of how long the crypto winter will last, we need to understand how long rising inflation will keep the Fed’s hawkish monetary policy stance in place. Falling inflation and interest rates are among the only things that can help crypto right now.
Bitcoin forecast for 2023
cryptocoin.comAs you follow, Bitcoin was trading at about $19,500 on the eve of the FTX crisis. However, it is on track to close the year at around $16,800. If the contagion continues to reflect from FTX’s bankruptcy, BTC has more room to fall. Even Cathie Wood, CEO of Ark Invest and a well-known Bitcoin advocate, acknowledges that major financial institutions may back out of crypto in the near term due to FTX.
In 2022, crypto’s reputation was severely damaged by crises, scandals, and damage to wider markets. So, another step towards $10,000 for BTC in 2023 might not be that difficult. JPMorgan Chase & Co. Analysts agree that the bottom point has not yet arrived. The bank predicts Bitcoin’s bottom at around $13,000, with a ‘series of margin calls’ across the market following recent events. Strategists also use Bitcoin’s cost of production to predict how much prices could drop. “Currently, that production cost stands at $15,000,” the JPMorgan team wrote in a note. But it will likely bounce back to the $13,000 low seen in the summer.”
2023 forecast for leading altcoin Ethereum
Where Bitcoin goes, Ethereum usually follows. Or at least that has been the case until now. After Ethereum Merge in September 2022, a major network overhaul for the leading altcoin, some analysts think that ETH’s price action could diverge soon.
David Kemmerer said, “ETH has yet to capitalize on its recently launched move to PoS. One reason is the crypto winter,” he says. Kemmerer says that the crypto could rise as high as $2,500 in the next six months. While this is an aggressive bull case, the fact remains that the same developments driving Bitcoin’s price are affecting ETH. The macroeconomic environment needs to cooperate for the incremental gains to return.
If not, Ethereum will likely fall even further. For ETH, which fell below $1,000 in June, it wouldn’t be surprising to see triple-digit price again in the next six months if more downside catalysts emerge.
Other altcoin projects to watch in 2023
2022 has been much worse for other speculative altcoins than BTC and ETH. With the bear market intensifying, altcoin projects are probably not where investors want to be. This situation will probably not change anytime soon. Many altcoins face a fierce battle for legitimacy during the bull market. This task has now become more difficult with less liquidity in the market. Altcoins will continue their downtrend until Bitcoin and Ethereum recover. And much like the moon cycles of days gone by, many of them will cease to exist altogether.
Meanwhile, stablecoins represent an even more interesting case for 2023. Crypto exchange Binance delisted several stablecoins in September, including USD Coin (USDC), the fifth-largest cryptocurrency with a market cap of $43 billion. Circle, the creator of USDC, announced shortly after that they will launch a euro-backed stablecoin on Solana (SOL) in the first half of 2023.
Some analysts predict that the competition will increase rapidly. This is due to the growing number of government-backed stablecoin projects known as central bank digital currencies (CBDCs). The Bank of Japan is conducting a launch trial with major banks in early 2023. Turkey has even announced that it will issue a stablecoin next year. Many more countries will do the same. One of them is far beyond the others: China. Until now, China’s CBDC development has been limited to local areas. However, it’s possible that he will change that with broader cohesion next year.
For current stablecoin issuers like Tether (USDT), Circle and Binance, this means competition is heating up. Richard Gardner, CEO of fintech company Moduulus Global, said, “Stablecoins are in a really difficult situation. Because there is little question that the emergence of CBDCs will exhaust their market,” he says. The stablecoin market is as difficult to predict as Bitcoin’s price predictions. One thing is for sure: the risk in the crypto industry remains high.
Contact us to be instantly informed about the last minute developments. twitter‘in, Facebookin and InstagramFollow and Telegram and YouTube join our channel!
Risk Disclosure: The articles and articles on Kriptokoin.com do not constitute investment advice. Bitcoin and cryptocurrencies are high-risk assets, and you should do your due diligence and do your own research before investing in these currencies. You can lose some or all of your money by investing in Bitcoin and cryptocurrencies. Remember that your transfers and transactions are at your own risk and any losses that may occur are your responsibility. Cryptokoin.com does not recommend buying or selling any cryptocurrencies or digital assets, nor is Kriptokoin.com an investment advisor. For this reason, Kriptokoin.com and the authors of the articles on the site cannot be held responsible for your investment decisions. Readers should do their own research before taking any action regarding the company, assets or services in this article.
Disclaimer: Advertisements on Kriptokoin.com are carried out through third-party advertising channels. In addition, Kriptokoin.com also includes sponsored articles and press releases on its site. For this reason, advertising links directed from Kriptokoin.com are on the site completely independent of Kriptokoin.com’s approval, and visits and pop-ups directed by advertising links are the responsibility of the user. The advertisements on Kriptokoin.com and the pages directed by the links in the sponsored articles do not bind Kriptokoin.com in any way.
Warning: Citing the news content of Kriptokoin.com and quoting by giving a link is subject to the permission of Kriptokoin.com. No content on the site can be copied, reproduced or published on any platform without permission. Legal action will be taken against those who use the code, design, text, graphics and all other content of Kriptokoin.com in violation of intellectual property law and relevant legislation.