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The previous year was rough for many cryptocurrencies. By July 2022, the cryptocurrency market had reached a staggering market capitalization of $1 trillion. Only a few months later, In November of the same year, particularly after the fall of the FTX exchange, both Bitcoin and the majority of altcoins seemed to have hit the rock bottom.
Following the bullish highs in 2021, digital assets dropped to pessimistic lows. Another crypto winter has begun. The crypto market crash of $2 trillion annihilated investors’ gains, left thousands of people without jobs, and eliminated coins and tokens that were once stable (remember Terra (LUNA)). Many people were certain this was the end of the crypto market.
But what people keep forgetting is that bear markets happen on a regular basis. In the 21st century, the market has experienced three major crashes. The first, between 2000 and 2002, was the most severe and devastating crash to date. The second occurred during the 2007-2009 recession, from which the idea of bitcoin and its conception was created, while the third took place more recently, starting from 2020 onwards. One can’t help but ask whether we’re now witnessing the end of the bear market and when will the crypto market recover?
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It’s already known that cryptocurrencies are extremely volatile, with their values fluctuating unexpectedly, rising and falling rapidly. As such, they are particularly prone to price fluctuations caused by external events. In the case of 2022, several events led to the downturn of not only digital but all assets in general. The cryptocurrency market was hit hard by three major events:
In June 2022, BTC dipped below $20k for the first time since 2020. The cause of the drop in the cryptocurrency market was due to the decision made by Celsius Network, a leading crypto company from the US, to allow for free transfers and withdrawals. The decision was made due to what the company referred to as “extreme conditions” and this led to a downward trend in the crypto market. Many began pondering if and how the crypto market will recover.
The market did rebound shortly but hit another low in September. However, the lowest low that the market experienced occurred in November 2022. It was triggered by the FTX exchange debacle that had a domino effect on other crypto platforms.
Other events that played a significant part were China’s clampdown on cryptocurrencies. In addition, crypto operations were speculated to desist in Russia. In line with this, unexpected and massive sell-offs of major crypto took place. As a consequence, panic began to spread triggering further sell-offs. The consumer confidence seemed to have been knocked for good.
The most recent and brutal crypto crash occurred in November 2022. The previous downturn occurred in the 2017-2018 period, again causing people to wonder when crypto will go back up again. The most recent crash differs from other crypto downturns. It has been characterized by a number of events that, due to their interconnectedness and business models, have spread throughout the industry.
But what about previous crypto market cycles? Since Bitcoin (BTC) is the oldest and greatest cryptocurrency, and it drives other assets’ prices up or down we’ll use it to illustrate how the market trended throughout history.
In late April 2011, the price of Bitcoin burst through its key psychological threshold of $1. At the time, it launched the first-ever rally that saw it reach $32 on June 8, 2011. The happiness, however, was short-lived as Bitcoin’s value later crashed, bottoming out at just $0.01 over the course of a few days.
Security problems at the now-defunct Mt. Gox, a Japanese cryptocurrency exchange that traded the majority of Bitcoin at the time, were widely blamed for the sudden sell-off. The flash crash in BTC’s worth in June 2011 saw it lose 99% of its value in a matter of days. It’s good to have in mind that, at that time, Bitcoin market cap was just around $20m, so the fluctuations were of significant magnitude.
The Bitcoin price peaked at $100 in the middle of April 2013 and then surged to briefly approach $1,000 in November 2013.
Shortly after breaching $1,000 for the first time in history, Bitcoin entered a severe bear market. A month later the BTC price dropped below $700. As the Chinese central bank started to crack down on Bitcoin in late 2013, banning local financial organizations from processing BTC transactions, the price of Bitcoin experienced a decline
After initially hitting a low of around $360 in April 2014, the price of the cryptocurrency continued to decline over the next two years, ultimately dropping to $170 in January 2015. With widespread interest in the cryptocurrency, many people were eager to know when the crypto will go back up.
By the end of 2017, Bitcoin had risen to a peak of $20,000 from its January 2017 low of $1,000. Yet, the victory of $20,000 was fleeting. Much like its previous historical peak of $1,000, Bitcoin fell and lost more than 60% of its worth in a matter of months. The continued Bitcoin market decline marked the beginning of a “crypto winter” in 2018. BTC’s lowest price was around $3,200 in December.
Security problems on Coincheck, another Japanese cryptocurrency exchange, featured the beginning of the crypto winter. A significant breach on Coincheck in January 2018 cost the cryptocurrency NEM (XEM) about $530 million.
As tech behemoths like Facebook and Google forbade advertisements for initial coin offerings and token sales on their platforms in March and June of 2018, respectively, the bear market intensified. The U.S. Securities and Exchange Commission’s denial of requests for Bitcoin exchange-traded funds also added to the bear market’s decline. Will Bitcoin recover was the question many crypto enthusiasts sought the answer to yet again.
The cryptocurrency market remained in a bearish state until 2020. At the time, Bitcoin not only recovered to $20,000 but also started a massive bull run that peaked at more than $63,000 in April 2021.
Although the cryptocurrency market achieved a market cap of $1 trillion in 2021, making it one of the most significant years in the industry’s history, Bitcoin faced a minor setback as well. Following its brief surge to new all-time highs in mid-April, the price of Bitcoin dropped significantly, eventually reaching a low of $29,000 within three months.
People didn’t need to wait long to get the answer to the question of when the crypto market will recover. The bear market didn’t last very long in spite of China beginning a severe assault on nearby mining farms. By the end of July, the bullish tendency rebounded. Bitcoin soared to its still-untouchable all-time high of $68,000 set in November 2021.
The FTX collapse and its aftermath undoubtedly call for crypto regulation. Though many oppose it, alleging decentralization as the main feature of cryptocurrencies, regulation is not necessarily bad news. In fact, it is believed to spur the crypto market’s rebound.
Though many people perceive regulation as negative, it’s expected to help mainstream digital assets. Besides, the financial industry is already heavily regulated in every other area. Therefore, it’s only a matter of time when the crypto market will be regulated. Will crypto go back up afterward? Many presume it will.
Regulation could potentially increase trust in long-standing institutions. The entire crypto ecosystem has been surrounded by a dearth of regulatory clarity, especially in the U.S. and Canada. Before making a purchase, many institutional investors are awaiting greater regulation clarity. In the event that they do, this might drive crypto prices up. The biggest concern is that the SEC announced that most cryptocurrencies besides Bitcoin should be classified as securities in the USA. This would lead to the closing and disappearance of many cryptocurrencies on the market including even the major crypto like Ethereum, XRP, etc. That could lead to a huge crash.
Today, there are more cryptocurrency initiatives and users than in previous years. Consider how cryptocurrencies are eliminating the need for middlemen in the gaming business by eliminating the use of debit and credit cards for payment. Thanks to blockchain and cryptocurrency technologies, gamers can also make cryptocurrency rewards while participating in games.
But how will the crypto market recover with the advancement of blockchain technology? The blockchain and cryptocurrency industries have also had an impact on the financial sector. Today, larger businesses and financial institutions are embracing Bitcoin more than ever before.
Plus, blockchain enables the management of real-time computing networks. It has the potential to revolutionize every facet of the digital economy. In addition, blockchain platforms found their use outside the sole peer-to-peer transactions. Ethereum (ETH), for instance, allows decentralized apps (dApps) to be developed and run on the network via smart contracts.
It is anticipated that technological developments, such as the creation of new blockchain-based platforms and the rising popularity of decentralized finance (DeFi) apps, will spur tremendous innovation and growth in the sector. As such, blockchain technology is expected to have a significant impact on all key business sectors. It is clear that use cases for cryptocurrencies and blockchain technology have grown and are now more widely recognized than they were a few years ago. It’s only a matter of time before we stop asking when the crypto market will recover.
It’s no secret that cryptocurrencies tend to struggle in times of slow economic growth, often experiencing the most significant downturns. In fact, during times of recession, it’s not uncommon for cryptocurrencies to lose up to three-quarters of their value. However, there is a silver lining to these bleak times.
Just because the market is experiencing turbulence doesn’t necessarily mean it’s a bad time to invest. However, it’s important to keep one thing in mind: always conduct thorough research and only invest an amount that you can afford to lose. At Veli.io, we’re here to provide support on your cryptocurrency journey.
Here are some of the options to consider when investing during the crypto winter when we’re all wondering when crypto will go back up.
It cannot be overstated: investing in cryptocurrencies carries a significant level of risk. If you’re an inexperienced crypto enthusiast, ask a professional advisor for help rather than risk losing your precious money.
The cryptocurrency market has had a tumultuous year thus far. The halving of significant altcoins and the insolvency of cryptocurrency platforms are just two of the numerous events that have taken place in recent months.
The crypto market has been the subject of extensive speculation, with a wide range of opinions from various analysts, ranging from optimistic to strongly negative. But instead of focusing on predictions, let’s look into real factors that could make us stop wondering if crypto will go back up ever again.
At the beginning of February 2023, Jerome Powell, the chair of the Federal Reserve restated that the disinflationary process had started that. In line with this, the increases in interest rates are expected to be appropriate. This might prevent the cryptocurrency market from continuing to decline. Furthermore, 2023 is expected to see the implementation of various cryptocurrency regulations, which may include both beneficial and unfavorable measures. Even if global regulations are established, they are likely to vary from region to region. As a consequence, many investors, particularly institutional ones, may start investing in cryptocurrencies. BlackRock, the leading financial and investment corporation, for instance, has already started offering Bitcoin to their clients.
Currently, only around 4% of the population has embraced cryptocurrencies. However, it’s anticipated that the number of digital asset holders will increase in 2023 for a variety of reasons. Facebook and Instagram are testing numerous cryptocurrencies, including Bitcoin and Ethereum. Starbucks has created an NFT-based Polygon loyalty scheme.
Additionally, social media platforms that advertise free speech like Telegram and Signal, have started integrating crypto features. Elon Musk has also stated that Twitter will incorporate cryptocurrency. Given the billions of users on these platforms, even a relatively small adoption rate of cryptocurrencies could have a significant impact.
The crypto market is unpredictable indeed. However, all these things indicate that crypto is here to stay. Massive adoptions are yet to come.
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