The crypto market has plummeted in 2022. Bitcoin once hit an all-time high of over $69,000 in November 2021 but now, this cryptocurrency is trading around the $20,000 mark. The stock and crypto markets both fell sharply after the US Federal Reserve (FED) raised interest rates and the US dollar is strengthening. However, Bitcoin price seems to be stable in recent times and for some investors, the lack of volatility is a good sign.
“Bitcoin price has basically fluctuated between $18,000-25,000 for the past 4 months, which indicates consolidation and a potential bottoming out pattern”, said Vijay Ayyar, an expert at Luno crypto exchange.
Antoni Trenchev, co-founder of crypto lending firm Nexo, also stated that Bitcoin’s stability is a strong indication that the crypto market has matured and is becoming less fragmented.
The crypto market has dropped so badly this year, losing $2 trillion in value since its peak in 2021. Bitcoin also lost more than 70% of its value from its ATH in November 2021. According to CNBC, the crypto winter is the result of the Fed’s tightening monetary policy, which is aimed at curbing high inflation. In addition, many large companies in the crypto space declared bankruptcy, which also accelerated the decline of the market. However, some investors believe that there are already signs of “ice thawing”.
“Bitcoin being stuck in such a range does make it boring, but this is also when retail loses interest and smart money starts to accumulate”, Ayyar said.
Matteo Dante Perruccio, president of digital asset management firm Wave Financial, said he has seen an increase in demand of traditional institutional investors in crypto as interest rates in the traditional market decrease. Financial institutions are also continuously taking steps to approach cryptocurrencies, despite the decline in prices and the interest of retail investors gradually waning.
Mastercard has announced a service that allows banks to offer cryptocurrency transactions. Mastercard previously launched a new blockchain security tool for card issuers. Meanwhile, Visa also partnered with crypto exchange FTX to offer debit cards linked to users’ accounts.
For now, the selling pressure has slowed as Bitcoin miners have halted the sale of their tokens. According to Goldman Sachs, Bitcoin miners sold 12,000 Bitcoins in June but only about 3,000 in September. This is seen as a good sign for the market. Matteo Dante Perruccio expects that the crypto winter will end sometime in Q2 2023.
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