Cryptocurrency

Cryptocurrency Market is Upbeat to Start 2023

Data by CoinMarketCap shows an increase in the total cryptocurrency market capitalization during 2023’s first week.

The figure reached approximately $803 billion, compared to $797 billion on Dec. 31. It’s an upbeat note for the entire market given that the market cap dropped 75% from its 2021 peak.

All eyes are set on Bitcoin but expecting a breakthrough now is like catching the stars. Bitcoin is hovering at $16,800 at the time of writing. Ethereum, on the other hand, finally broke the resistance at $1200 after ending the previous year below that mark.

The cryptocurrency market started the year with some minor rallies, however, there’s yet a lot of turbulence ahead.

Unfinished Businesses

Suffering from the collapse of FTX and its venture arm Alameda Research continues to plague markets. Even if 2022 was already in the past, experts suggested that we could see another bear market this year as ashes of the burnt empires.

When some of these exchanges or businesses go bankrupt or suspend withdrawals, many clients suddenly become creditors, and many investors who possess Bitcoin through an intermediary, trading platform, or loans find themselves in financial distress.

David Kemmerer, the co-founder of the crypto tax platform CoinLedger, predicted that Bitcoin could bottom out at least for the first few months under the ripple effect of the FTX implosion. Several crypto companies have frozen customer withdrawals due to the incident.

It’s noteworthy that the flagship cryptocurrency will enter the next halving cycle in 2024. Many crypto members have expected that event could touch off the bull run.

Different analysts may come up with different timing of the end bear cycle. But it seems that they share common ground in the long-term bright future of Bitcoin.

Cathie Wood, the founder of ARK Invest, believes Bitcoin’s decentralization and transparency could bring the money revolution, saying that it’s a “good time for thought leaders to assess lessons learned from crypto crises and reassess the outlook for bitcoin, ether, and other crypto assets.”

The year 2023 also calls for certain levels of regulation to keep up with the fast-paced environment of cryptocurrency.

The US lawmakers in fact introduced several bills linked to digital assets and blockchain throughout the past year. But the exposure of the industry giants which previously gained major trust from the community puts the government under pressure for stricter laws aimed at protecting customers.

Macro Conditions

The correlation between the macroeconomic outlook and the cryptocurrency market has been brought to light by recent interest rate hikes and the subsequent tightening of monetary policy.

Few enthusiasts of cryptocurrencies anticipate a cyclical fall, sometimes known as “rain before the rainbow.” This situation is somewhat reminiscent of the crypto winter that occurred in 2018, during which Bitcoin had a decline of 75% before seeing a rise of 2000%.

This forecast, on the other hand, contradicts what “Big Short” author Michael Burry predicted. The investor recently forecast that there will be a possible recession in the United States regardless of the CPI scenario.

The correlation that exists between Bitcoin and stocks has also been robust. Following the speech of FED Chairman Jerome Powell in August, the S&P 500 index plummeted in a day, while bitcoin also showed a decline.

There is no doubt that Bitcoin is trading like a risk asset, and if we see a larger sell off in global markets, Bitcoin and cryptocurrency will almost certainly be impacted.

Analysts believe that despite the planned halving of the Bitcoin supply not taking place in 2023, it will still play a significant part in the maturation of the cryptocurrency ecosystem.

It’s possible that the ecosystem is getting ready for a new wave as a result of an aggressive blockchain upgrade, improved corporate strategy, and a return of investor attention.

The post Cryptocurrency Market is Upbeat to Start 2023 appeared first on Blockonomi.

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