Regulatory pressure, banking crisis and recession have been wintering the cryptocurrency market for nearly 1.5 years. However, things could be different for Bitcoin, Ether, and other altcoins that reverse the trend in the new year.
Crypto winter unraveling as Bitcoin surpassed $30,000
The leading cryptocurrency Bitcoin has recently surged 72% to over $30,000. However, it later dropped below $27,500 as inflation and rising interest rates frightened investors. Ethereum, on the other hand, rose 62% to over $2,000 after a successful upgrade.
According to CoinMarketCap, the combined market capitalization of all cryptocurrencies has increased by nearly 50% since the beginning of the year to $1.2 trillion. However, while it still pales in comparison to its 2021 peaks, the price rally is causing observers to question whether the “Crypto Spring” has finally arrived or if the crypto winter is still ongoing.
Has cryptocurrency really survived the winter?
“Crypto works like clockwork on four-year cycles,” says Matt Hougan, chief investment officer at Bitwise Asset Management.
So far, there have been three rounds of top and bottom. From 2011 to 2013, the BTC price rose, and then in 2014 one of the oldest Bitcoin exchanges, Mt. Gox crashed. From 2015 to 2017, crypto prices rose again, and in 2018, the ICO era deprived many investors of the coins they were fervently buying when most of them turned out to be quick cash grabs.
From 2019 to 2021, prices rose once again and fell in 2022 after a number of high-profile crypto companies went bankrupt, most notably FTX, which was once worth $32 billion. cryptocoin.com We have conveyed the destruction caused by the bankruptcy.
What’s next?
Some analysts have understood that Bitcoin’s price fluctuations roughly correspond to the halving cycle. 50%
This reduction in bitcoin rewards, according to theory, makes the supply of the cryptocurrency scarce, which in turn increases its price.
Gautam Chhugani, managing director and senior analyst at AB Bernstein, said: “There is a big rally after the halving. “Before halving, there is a rally of anticipation happening,” he says.
Bitwise’s Hougan believes that the start of every four-year cycle corresponds to technical innovations. In 2011, mass crypto exchanges such as Coinbase, Kraken were launched, allowing ordinary people to buy Bitcoin with cash.
In 2015, Vitalik Buterin invented Ethereum, which promised to centralize cloud computing. In 2019, “the first real applications of Ethereum” emerged, including DeFi, stablecoins, and NFTs.
Requirements for bitcoin and cryptocurrency rally
AB Bernstein’s Chhugani believes that in the short term, Bitcoin and the crypto industry will follow the peaks and valleys of the larger world economy. However, he is optimistic about the medium and long-term outlook. “Bitcoin has never had two negative years,” he said in his recent statements.
Analysts at Bitfinex Alpha, a market research team within crypto exchange Bitfinex, agree. “While it is unclear whether the crypto winter is over or not, Bitcoin network activity shows a healthy upward trend in transaction fees,” he said in recent statements.
Brian Rudick, senior strategist at crypto trading firm GSR, thinks it’s arguable that the industry is even in a bear market. “It depends on what your definition of Crypto Winter is,” he said on the subject.
Rudick says there will be a 40% increase in crypto users in 2022 according to Crypto.com, a 5% increase in developer numbers in 2022 according to Electric Capital, and a 293% increase in smart contracts or running programs deployed on Ethereum. reported a substantial increase.
Is everything so positive?
Despite the optimism, AB Bernstein analyst Chhugani warned that the frenetic pace that drove the Bitcoin price to nearly $70,000 in 2021 is not just around the corner: “Regulation remains tough. So we are not in the middle of a crazy bull market.” However, it continues to rise. “This industry has died several hundred times in 14 years,” he said.
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