How Crypto Traders Can Weather A Bear Market

Is Crypto Winter finally over? What’s driving the Crypto Price Boom? 

Since the beginning of 2023, Bitcoin, Ether, and other marquee tokens have skyrocketed despite regulatory crackdowns, banking collapses, and persistent inflation. HC Wainwright, a leading New York investment bank, recently informed its investors that the crypto winter has finally come to an end. Furthermore, crypto lending platforms that have endured the storm are best positioned to profit from a future hype train! 

Are you aware of the recent trends in the world of cryptocurrencies? Bitcoin, the most valuable digital currency in terms of market capitalization, has surged by 72% and recently breached the $30,000 mark (although it has slightly declined subsequently due to inflation and increasing interest rates). Additionally, Ether, the second most valuable cryptocurrency, has increased by 62% and exceeded the $2,000 mark following a successful upgrade to its blockchain. 

The collective market value of all cryptocurrencies has surged to roughly $1.2 trillion, indicating remarkable growth of 50% from the beginning of the year, as reported by CoinMarketCap. While this surge falls short of the peak value of almost $3 trillion achieved in 2021, the current price rally has sparked curiosity among some individuals about the possibility of the onset of Crypto Spring. The crypto community predicts it’s certainly an exciting time! 

Is Crypto Winter actually over in 2023? 

During the last decade, the cryptocurrency market has experienced several cycles of highs and lows, where prices surged to unprecedented levels before collapsing to new lows. Matt Hougan, Bitwise Asset Management’s Chief Investment Officer, believes that these cycles occur every four years and have repeated themselves thrice since 2011. 

The initial peak and valley took place between 2011 and 2013, with Bitcoin’s price rising and then falling in 2014 following the downfall of Mt. Gox, one of the earliest Bitcoin exchanges. The second round of ups and downs happened between 2015 and 2017, with crypto prices increasing before plummeting in 2018 during the era of ICOs. The most recent cycle occurred from 2019 to 2021, with prices rising once more before dropping in 2022 following several high-profile crypto firms’ bankruptcies. 

Top Cryptocurrencies to Watch in 2022

The “halving” theory is one explanation for Bitcoin’s price changes and the industry’s expansion. It posits that Bitcoin’s price rises when the rewards for mining Bitcoin are halved, reducing the cryptocurrency’s supply and increasing its value. 

Another explanation is Hougan’s four-year cycle hypothesis, which links the start of each cycle to technical advances. For example, mass-market crypto exchanges were launched in 2011, allowing people to buy Bitcoin with cash. Ethereum was created in 2015, offering to decentralize cloud computing. In 2019, the first practical applications of Ethereum emerged, including DeFi, stablecoins, and NFTs. 

While these theories are not foolproof and are based on a limited dataset, if the trend persists, crypto may experience another bull run. The cryptocurrency market is volatile, and investors should always conduct thorough research and exercise caution before investing. Nonetheless, the potential for significant profits makes the crypto market an exciting and intriguing arena to follow in the future. 

Bitcoin prices could rise 268% to $100,000 

The crypto world is abuzz with excitement as Standard Chartered, one of the world’s largest banks, predicts that bitcoin will surge to $100,000 by the end of 2024. This forecast represents a staggering 268% increase from current levels and has caused many investors to take notice. 

According to the bank’s note, the much-dreaded ‘crypto winter’ is finally over, and bitcoin is set to flourish once again. The collapse of Silicon Valley Bank last month has contributed to this bullish outlook, as the turmoil caused by the collapse has led to fears of banking contagion. Bitcoin, as a decentralized, trustless and scarce digital asset, has re-established its use case in this climate. 

As bitcoin’s rivals lost ground, the coin benefited from its status as a safe haven, a perceived relative store of value and a means of remittance, the note said. Standard Chartered now sees bitcoin’s share of the total crypto market cap rising to the 50%-60% range, up from 45% today. 

The note also highlighted that bitcoin’s recent rebound back above $30,000 represented a turnaround for crypto miners, who had previously seen mining margins get squeezed. With energy prices likely having peaked, the structural profitability backdrop for miners should improve, adding further upside, it said. In addition, the note mentioned that bitcoin’s upcoming halving in 2024, when the reward given to miners is cut in half, is also a tailwind that could lead to price increases. 

Regulatory changes that promote investor access to the market, such as the creation of digital asset ETFs and stablecoin regulation, could also contribute to the coin’s growth. The bank notes that some proposals that have been passed in Europe hold positive implications for crypto volatility. 

"While sources of uncertainty remain, we think the pathway to the USD 100,000 level is becoming clearer," said Geoff Kendrick, a strategist at Standard Chartered. As the Federal Reserve nears the end of its tightening cycle, Kendrick believes that bitcoin is set to trade better in the future. Its correlation with the Nasdaq suggests the crypto should trade better if risk-on assets improve broadly. 

Investors are advised to exercise caution and do their due diligence, as the crypto market is known for its volatility. However, with such a bullish outlook, it’s no surprise that many are keeping a close eye on bitcoin’s future growth. 

What’s in store for Ethereum? 

In the first quarter of 2023, Ethereum’s price movement caught the attention of investors worldwide as the coin’s value experienced a significant surge. From a starting price of $1,200, ETH’s value rose to an impressive $1,880, with four consecutive monthly green candles. 

This positive trend was reminiscent of the bullish run of 2021 when the coin’s price increased from $800 to an all-time high of $4868. Although there have been some retracements, the current market movement suggests that Ethereum may experience another upward surge in the near future. 

Is Crypto Winter finally over? What's driving the Crypto Price Boom? 

However, some experts remain skeptical about ETH’s future prospects, expressing concerns about the Securities and Exchange Commission (SEC) potentially undermining Ethereum’s success in the United States. This fear was shared by Ruadahan O, creator of “Seasonal Tokens,” who predicted a modest year-end price of $2,200 for ETH. 

Despite these concerns, some industry leaders, like Aaron Rafferty, CEO and co-founder of StandardDAO, remain optimistic. They believe that US authorities, such as the CTFC, may classify ETH as a commodity rather than a security, inspired by the ongoing regulatory changes in Europe with the MiCA regulation.  

Overall, while the future remains uncertain, the current market trends suggest that Ethereum is on the cusp of another bullish run. Investors are keeping a close eye on the developments in the cryptocurrency industry, waiting to see if history will repeat itself as it did in early 2019. 

Could this be the last Crypto Winter? 

Are we seeing the tragic crypto winter come to an end? According to several professionals in the blockchain and cryptocurrency space, the answer might be yes. Although there have been several boom-and-bust cycles in the sector, the most recent one has been particularly difficult, leaving many investors doubtful and disappointed. However, there are three encouraging signals that the crypto winter might be ending. 

The first sign is the surge in enforcement actions by law enforcement.  

The cryptocurrency space has always been a target for ruthless opportunists trying to take advantage of the hype and make a quick buck. However, as more regulators step in, the industry is becoming more regulated and accountable. With enforcement actions being much more effective than warnings and social-media flame-wars, bad actors are being brought to justice, which ultimately helps to build trust in the industry. 

The second sign is the contradictions and inconsistencies in public policies.  

It can be difficult to get everyone in the blockchain community to agree on what policies should be, as many nations have complicated and decentralised regulatory structures. However, it will take some time for this clarity to manifest as regulators present a distinct and uniform interpretation of what the law implies, but it is on the way. This will aid in creating a framework for blockchain technology and cryptocurrencies that guarantees investor protection and promotes the sector’s expansion. 

The third sign is the maturing industry leadership and product.  

The boom-and-bust cycle occurs when expectations exceed companies’ capacity to deliver, resulting in a failure to generate revenue. However, it is important to remember the lessons from the dot-com boom and bust as the blockchain industry matures. Non-fungible tokens (NFTs) are gaining permanent adoption in both user and business ecosystems.  

Meanwhile, industrial companies are utilizing blockchain for use cases unrelated to financial engineering, such as supply chain management, product traceability, and emissions tracking. Privacy technology has also enabled companies to leverage shared, public technology infrastructure without compromising their sensitive business information. 

Although we are currently in a crypto winter, the blockchain industry's future looks bright. Clearer regulations, the imprisonment of bad actors, and the emergence of genuine products and valuations based on revenue and profits signal the industry's growth. While there may still be fluctuations, the industry is unlikely to experience extreme booms and busts. Therefore, it is worthwhile to appreciate this current crypto winter as it is expected to be the last one. 

This is a great time to add Crypto to your portfolio! 

Acquiring bitcoin during bear markets can be a smart move, but it’s not the only opportunity to add this distinctive asset to a diversified investment portfolio. As the current bear market draws to a close, now is an excellent time to consider including bitcoin in your portfolio, as the next bull market for bitcoin may have already started. Here’s why: 

Is Crypto Winter finally over? What's driving the Crypto Price Boom?

1. The halving is just around the corner:  

Approximately every four years, a phenomenon known as the Bitcoin halving takes place, resulting in a reduction in the rate at which new bitcoins are issued. The two previous halvings have been instrumental in sparking significant bitcoin bull markets, and it’s not difficult to understand why. Assuming that demand remains constant, a decrease in the supply of bitcoins prompts an upward adjustment in price. The principle of supply and demand is always in effect, and when the supply is limited, the price increases. The next halving is less than twelve months away. 

2. There are no longer tourists:  

When the halving-triggered upward trend in bitcoin’s price gains momentum, it tends to attract traders who believe that the price will continue to rise, leading to a bubble. However, this trend eventually comes to an end and the traders are often forced to exit their positions as the price falls. According to the average age of unspent bitcoin transaction outputs (UTXO), we have already passed this point of decline. The temporary traders have left, while the long-term investors, or “HODLers,” remain. 

3. No amount of bad news can bring new lows:  

The previous year was characterized by a significant amount of negative developments in the world of cryptocurrency, which had an impact on the value of bitcoin. Various entities such as Terra, Three Arrows Capital, Celsius Network, BlockFi, Voyager Digital, and FTX experienced major setbacks. However, despite concerns about the financial stability of Genesis, DCG, Grayscale, and Binance this year, bitcoin did not suffer any significant declines.  

This suggests that the market had already reached a point where most of the selling pressure had been alleviated, and that concerns about the aforementioned entities did not trigger any further panic. (It’s worth noting that CoinDesk, like Genesis and Grayscale, is a subsidiary of DCG.) 

4. The cycle repeats itself:  

At some point in the future, Bitcoin is likely to break away from its current four-year price cycle. However, until that happens, history appears to be repeating itself. During the Bitcoin bear markets of 2014-2015, 2018-2019, and 2022-2023, the price tended to hover around a certain level before ultimately plummeting to a significantly lower level and remaining there for several months.  

This decline followed a consistent pattern, with a peak, a period of several months of decreasing prices, and a final drop of over 40%. These trends have held true across all three bear markets. 

5. We are unlikely to see $16K bitcoin again:  

In the previous two cycles, the price of bitcoin did not drop below its pre-capitulation level after the initial decline. However, in the last cycle, it came close to revisiting the low, but only after a significant market liquidation caused by the COVID-19 outbreak. With the upcoming bitcoin halving scheduled for within a year, it is probable that the price of bitcoin has already reached its lowest point, assuming no significant liquidation event occurs. 

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