In 2022, the price of cryptocurrencies fell, Luna & Terra crashed, and FTX declared bankruptcy. The year 2022 was unusually harsh for the cryptocurrency market. That kind of situation is known as “crypto winter.”
The phrase “crypto winter” is usually used to explain a bearish crypto market. A “crypto winter” is defined by adverse sentiment & decreasing average asset values across multiple digital currencies.
Investors that entered the cryptocurrency ecosystem in late 2021 are currently underwater. They can only wait and hope that things improve as fast as possible in the meantime. So, let’s first look at; how we got here before analyzing when this crypto winter will end.
Understanding of a Crypto Winter: Past Overview
Crypto winters have happened several times in the past years. The history of cryptocurrency is not so brief. Even though Bitcoin was invented in 2009, it didn’t truly begin to get widespread attention until 2017. Bitcoin and the rest of the cryptocurrency market have already been through several periods of boom and bust during that period.
Suppose crypto values dropped & remained lower than previous peak prices from late 2017 till December 2020. However, a lengthy crypto bull market started in December 2020, and values were boosted to new peaks.
Through 2021, the market was very unstable, with a 50% drop in bitcoin between April and July. Just as rapidly, it started to rise again, reaching over $70,000 before the latest fall. Grayscale Investments claims that the current crypto winter initiated on June 13th, 2022.
Even with the unpredictable norms of cryptocurrency, November was a disaster. When it filed for bankruptcy, FTX, one of the world’s largest and quickest cryptocurrency exchanges, stunned the whole industry.
When will the current crypto winter end?
There are various opinions about when the crypto winter will end. There are a lot of technical analysis (TA) models that look at previous trends in the crypto sector to try to answer this issue. TA attempts to derive a clear narrative based on historical bear market cycles.
These models are the most optimistic, and some people assume that the worst is over and the markets should have started to warm up by now. This viewpoint’s biggest drawback is that it applies to the past. It creates models based on primary data and does not consider new or impending changes.
The Bitcoin halving cycle is another famous notion that experts frequently mention. In the crypto world, Bitcoin is the tide that elevates all ships. Although we are beginning to observe certain projects operating independently of changes in the value of bitcoin, the general pattern continues to be that as the price of bitcoin swings in one direction, so does the market as a whole.
Therefore, this might serve as a benchmark for estimating when we might end this crypto winter. This block will be reduced from 6.25 to 3.125 BTC in March 2024 if predictions are correct, marking the next halving. In late 2023 or early 2024, a thawing may begin to be observed. However, this model also has to take the dynamic plays part into consideration.
High inflation and massive interest rates have created a dangerous investing combination. We are witnessing a slowdown in the economy since capital is no longer readily available at low costs. Investment firms can borrow more easily. Thus they can hold fewer high-risk assets like cryptocurrency or invest in crypto initiatives.
Although no one can say for sure, experts don’t believe it will stop soon. Fadirepo estimates that we won’t leave this place until at least mid-2023 and will likely take longer to exit this bear market.
Why do experts believe the crypto winter will end soon?
In 2022, cryptocurrencies experienced a difficult period. However, according to many experts, the crypto winter will end in 2023. Let’s uncover some predicted reasons that show 2023 will be a good year for crypto.
Greater Concentration on Funding is on the way. According to experts, venture capitalist financing for cryptocurrencies will fall in 2023 and shift to ventures with a higher chance of success. The crypto winter will only last for a while in 2023 because of this, which will be wonderful for the sector.
The unexpected and dramatic fall of FTX was one of the major crypto stories of 2022. Millions of dollars were lost by investors. The industry received a lot of additional attention following the collapse, and it wasn’t good attention at all. However, because more DeFi will be arriving, experts forecast that the winter will be gone in 2023.
What should crypto investors do right now?
It’s a good idea to conduct some research right now, whether you’re an experienced investor or just getting started with cryptocurrencies. The collapse of FTX serves as a warning to examine and comprehend the terms of service thoroughly. Also, it highlights that you must research user agreements of your exchange and your wallet and expose the dangers of participating in the cryptocurrency market.
Now could be a great time to think about buying a cryptocurrency wallet if you don’t already have one. The safest solution is often a cold wallet, which stores your tokens on hardware isolated from the internet. Hot wallets, on the other hand, can only be accessed online.
Only invest up to 5% of your overall investment portfolio in cryptocurrencies, and only what you can afford to lose.
Suppose you still need to enter this market. In that case, it’s a fantastic opportunity to learn about the various ecosystems, the technology that enables cryptocurrencies, and the advanced initiatives in the process, such as NFTs, web3, and the metaverse.
Last Words:
As it is predicted, crypto winter will end soon. So, are you ready for great investment opportunities?
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Will 2023 be a successful year for cryptocurrency?
As interest rates rise across the globe, 2023 will be a rebound year for those who wish to resume using cryptocurrencies to invest in real estate.
Will cryptocurrency revive in 2023?
Analysts & investors are sure that the crypto markets will revive in 2023 after a bear market in 2020.
Which cryptocurrency is the best for 2023?
According to some, the best financial move for 2023 will be to invest in Ethereum. It is because Ethereum’s value is steady and has significantly increased since 2021.
How long will the bear cycle in crypto last?
Bear markets often drag on for a long period, although the sharp decline lasts only about a year.
