Despite how difficult it may be to accept, the year 2022 is drawing to a close very rapidly. The month of November has already crept up on us, and very soon everyone will begin moving their attention to what will happen in 2023.
It is very necessary to recall the events of this year if one is to have any hope of comprehending what could take place in the next year. The year 2022 was one of those years that will be remembered for all time. Regarding the world of cryptocurrencies, it was certainly a year that the majority of us would prefer to put behind us as quickly as possible.
Exactly one year ago, at this same moment, the price of a single Bitcoin achieved a new all-time high of $69,000. When we were in that situation, when we were looking forward to what may occur throughout the year 2022, our hopes for a bull run were still alive. The vast majority of participants had an extraordinary level of confidence that Bitcoin prices will undoubtedly reach at least $100,000, and that estimate was considered to be conservative.
We were expecting Ethereum’s price to rise to $10,000 on the back of the buzz around their impending unification. However, as we now know, 2022 was a year that did not live up to expectations in terms of pricing. Since November of the previous year, it would seem that prices had done nothing but continue to fall. However, it is not even the most serious problem. For those of us who have been involved in cryptography for a number of years now, all of that is something to which we have been used. After experiencing each of the four cycles of bullish and bearish patterns throughout one’s lifetime.
If the year 2021 in the cryptocurrency market were to be summed up in one phrase, it would be labeled the year of over-leverage, greediness, or self-inflicted wounds. Those who took part in activities of such kind were given appropriate punishments and were instructed in a challenging lesson that we won’t soon forget.
We saw some of the biggest funds and companies in the market go bankrupt, as well as the loss of almost all of the money from big crypto projects. These include, but are not limited to, 3AC, Celsius, Voyager, Vauld, LUNA/UST, and others. Even if you were lucky enough to avoid bankruptcy as a result of your participation in high-risk, high-leverage trading, There is a good chance that you helped bring down one of the crypto loan companies or that you lost money when you invested in Luna or UST.
Both of these scenarios are quite likely. Because of this, either your cash on those platforms was blocked, or the value of the cryptocurrency you owned plummeted, leaving you with nothing. Everyone received a harsh lesson about how unsafe cryptocurrency may be and how crucial it is to have one’s own cryptocurrency under one’s control. Earning interest in your cryptocurrency is a nice perk, but the primary focus should be on safeguarding your holdings and ensuring that you do not lose any of your coins.
A Glance Toward the Year 2023
While it is possible that the globe will remain in disarray for a considerable amount of time, and as a result, many people’s financial situations will worsen, On the cryptocurrency front, there is now some optimism that is starting to build up. This is good news.
The Reversal of FED Policy
The reason why there is a growing sense of optimism is that the majority of economic analysts believe that the Federal Reserve of the United States will soon shift its focus from aggressive interest rate rises to fighting inflation. which is one of the primary reasons why riskier financial markets like Bitcoin, cryptocurrencies and tech have been falling during the course of this year. The United States can’t keep raising interest rates at the same rate because it has so much debt. It would lead to a complete collapse of the economy. Everyone is aware that the United States of America will need to make adjustments to its plan sooner rather than later, and until that time comes, every eye is focused on this scenario.
It would only take one remark from Jerome Powell, chairman of the Federal Reserve, to announce that the Fed would begin to slow down its rate rises or be less aggressive in its pursuit of those rate hikes. When this event takes place, it is anticipated that the value of the stock market would immediately rise by at least 10% and maybe much more. If anything like that is going to happen with equities, then we can only speculate about what the more volatile crypto assets are going to do. There is a possibility that the price may go up by at least thirty percent in only one day.
This will not take place today, and it is possible that it will not take place next week or perhaps next month. However, it is going to take place within the next three to six months.
The True Value of Bitcoin Is Brought to the Attention of the World
Bitcoin has been different from other traditional financial assets for most of its life. When a lot of people were worried about a global panic because of war or inflation, the price of bitcoin went through the roof.
This has not been the case during the course of the last year, but in my view, this will not go on indefinitely. Despite the fact that governments are making significant efforts to battle and control inflation, It would seem that it is having little to no impact, and it is arguable that the problem is still getting worse. Those people who keep their money in cash after having worked hard all their lives are being stolen from.
Out of sheer desperation, an increasing number of individuals are coming to terms with this reality and searching for the most effective means by which they may defend themselves. They may initially seek to gold, but its performance hasn’t been as good as many people would expect a safe-haven asset to be during a scenario of this kind on a macroeconomic scale. Then it’s possible that they’ll start looking at Bitcoin. An asset that is, in many respects, comparable to gold, yet far superior to it.
There is a good chance that the wealthy have already started moving some of their money into bitcoin. Coinbase was the recipient of a massive Bitcoin withdrawal in the recent past, totaling more than 50,000 BTC. Whoever removed this Bitcoin can only be a subject of conjecture at this point. The most probable candidate, though, is either an incredibly rich individual or a firm or government that has included bitcoin in its financial statements.
One thing is certain: the global community has a very different perspective on Bitcoin now than it had during the most recent bull run in 2017. People are starting to comprehend the genuine importance of it, and as a result, its image in the public eye is significantly improving. It takes some time for a new asset to earn the confidence of potential investors before they would make investments in it. However, rather than being a question of “if,” this is more of a “when” situation.
The Consequences of Ethereum’s Progression Converge
The Ethereum merging has successfully been completed. The majority of people would agree that it did not have as much of an impact on pricing as we had anticipated. However, it is essential to keep in mind that there was significant macroupheaval occurring at the time of the combination. It’s possible that this was the one and only factor that kept prices from plummeting much more.
The most important thing to note is that the rate of inflation in Ethereum has reduced by approximately 95% since the unification. It is possible that the impacts of the merger may not be felt either today, tomorrow, or in the following week. However, bitcoin could be worth even more than half of its current value. After a few months have passed, there will come a moment when the market will start to feel the shock of the supply. At that point, the price of Ethereum will start to rise, bringing the price of other cryptocurrencies and the market as a whole along with it.
As we get closer to the Bitcoin Halving,
The Bitcoin halving will occur in around 17 months from now. Even if the halving won’t take place until the following year, it is essential to keep in mind how the market often acts in the months leading up to the halving. The Bitcoin inflation rate is halved every 4 years thanks to a process called “halving,” which also occurs every 4 years. The price of Bitcoin starts to move up around 5 months following the halving, which ushers in the beginning of the second bull run. About a year passes during a period of rising prices, which is then followed by another year of falling prices.
And as we get closer to the second halving, the prices continue to stagnate before finally beginning their ascent. We have been experiencing negative pricing for more than a year at this point, which puts us in the area of the market that is either moving sideways or going up. In the same way that we will not be able to observe the effects of the impending ETH merging in a single day, we will not be able to see the effects of the coming BTC halving either. However, its impact on the market will become more apparent over time.
In the near future, the macro will be the biggest problem that cryptocurrencies will have to solve. In the event that the conflict was to come to an end or if the markets became more dovish, the majority of people don’t realize how quickly the crypto market might revive. It would only take a few months of positive price action.
Even though things may not appear positive right now, it is essential to take a step back and keep in mind that this will be nothing more than a blip in the annals of crypto history. Nothing has changed, and I would argue that the rate of cryptocurrency acceptance over the last two years has accelerated significantly. By the year 2030, all of us will look back on this period and wish that we had purchased more at the time.
Where do you stand? What are the most important things about cryptocurrency that people should think about in 2023?