2022 has been one of the most challenging years in the history of cryptocurrencies. While there were several slumps before, following which digital assets returned to their pre-crash levels or even climbed above them, last year has seen massive drops in values owing to the emergence of the crypto winter. Many investors have lost significant amounts of capital rather suddenly, an event that has led many to sell their remaining assets in a bid to save what was left.
Exchanges such as Binance have supported investors who continued to buy Ethereum, confident in the knowledge that the coin is sure to bounce back sooner or later. Then, in January, the long-awaited change happened, and cryptocurrency prices began to climb. Investors rejoiced, notably as the ascension continued later into the first month of the year. But what can you expect from the crypto market in the upcoming months? Is the change going to be positive, or will prices plunge again?
So far, February has been quite different from January. Cryptocurrencies are having a breather this month. While this isn’t good news at first glance, as it indicates a lack of further progress, it is actually a good thing. Constant growth and vertical rallies are typically unsustainable and become hard to control in the long run. Often, there’ll be a crash associated with them. It’s much better to see intervening minor dips that can help you assess your trading position better.
Nevertheless, analysts are optimistic that the positive shift of 2023 will hold for this month and become even stronger over the rest of the year. As such, if you expect to continue buying at low levels, you might find that you won’t be able to for long. Prepare for the unexpected and be ready to face a sudden spike in prices. Researchers are confident that a crypto summer is underway and that it could emerge on the market as early as the second quarter of 2023.
Bear VS Bull
The economic trends for 2022 have been decidedly bearish. On top of the harsh blows dealt by the pandemic for two successive years, climbing fuel and energy prices and skyrocketing food prices have created a volatile financial market. The general public has felt these shifts quite severely, with many worrying they won’t be able to pay their rent on time and having to cut back on utilities and groceries to make ends meet.
This generalized unpleasant situation has also transferred into the crypto environment, where the bearish tendency has brought forward the much-dreaded crypto winter. However, many expect this to change this year, as a bullish trend is bound to take over. Inflation has been steadily decreasing in the United States over the past few months, and interest rate hikes are expected to slow down or even pause.
Crypto analysts expect the bear market to end at the beginning of 2023 and make room for bullish tendencies. This event may have already occurred, as cryptocurrency prices hit new lows in November and December, finishing the year with some of the lowest values seen in the past few years. In some cases, the price fell by over 60%. Once a crypto’s worth has reached the bottom, the only way to go is up. Generally speaking, every time a bearish tendency became dominant on the market, a bullish one soon followed. Given that the last bear market was quite extreme, investors can expect significant returns once the market picks up speed again.
It’s no secret that cryptocurrencies are volatile. This characteristic is driven by digital assets being decentralized and unregulated by third-party authorities such as governments, banks, or other financial institutions. As a result, prices are driven by supply and demand above all else. When a coin is scarce, that’s when the prices are higher because, as an asset, it is rarer and, therefore, more valuable.
This trend was most easily noticeable in the world of NFTs. These tokens were often sold for astronomically high prices, usually worth millions of dollars. While the market has plummeted in recent years, all interest in non-fungible tokens isn’t gone. With crypto on an upwards scale, it’s not far-fetched to imagine that other blockchain applications will become popular again.
Crypto buying, selling or trading has an impact on the blockchain as well. This is particularly the case where there’s a large number of transactions in relatively short succession, one after another, or when there’s a couple of or even a single, significant transaction in which a lot of capital is used. Recently, whales have moved a whopping $743 in crypto, the equivalent of 5,278 tokens. The amount was transferred to an unidentified wallet.
Generally speaking, the actions of crypto whales leave a significant mark on the cryptocurrency environment. The most common effect is for a sudden bullish price action to emerge. This is because they have the purchasing power to trade significant amounts to influence market prices.
AI tech has become increasingly important over the recent years, so there’s no surprise that there’s talk of blending it with blockchain, the other big new technology that has taken the world by storm in recent years. The Ethereum blockchain, known for its innovative approach, has come up with a new project that’s bound to take the world by storm. Known as SingularityNET, it has recorded a 175% increase in just one week, jumping from $0.16 to $0.44.
The project is a blockchain-based marketplace hosting artificial intelligence services ranging from applications to individual AI algorithms. While still in its incipient phases, it shows promising characteristics in the field of decentralized finance, biotech, gaming, biotech and even enterprise-level artificial intelligence applications.
After a rough year in 2022, the current year seems likely to be more favorable for the blockchain, cryptocurrencies and investors. If you’re considering starting an investment portfolio this year, create a strategy beforehand. Since the market is still recovering, there are bound to be some fluctuations yet to come. You want to be prepared for them as they arrive.