As we reach the last quarter of another tumultuous year, learn more about the current crypto market trends and outlook so you can make the right moves.
Following a massive bull run from 2020 to 2021 driven by easy money policy from governments worldwide as well as the Bitcoin halving in 2020, both main coins and altcoins have since cooled off from record all-time highs. Indeed, the ambient temperature of crypto markets has turned rather frosty, so much so that pundits have suggested we could be in for a prolonged crypto winter ahead. One question on every investor or trader’s mind is – how long will the lull last? Join us as we unravel the various macroeconomic and political factors that will inevitably shape the crypto market in the near term.
Current state of the market
While the cryptocurrency narrative has been largely bullish over the past two years, cryptocurrencies are undoubtedly in a bear market at the moment. The Bitcoin fear and greed index, which is a broad indicator of market participant sentiment on crypto’s flagship coin, has plummeted to extreme fear and stayed within that zone. Since then, many pundits have suggested that the cryptocurrency bull run has come to a close for the current halving cycle. Indeed, many signs indicate that this may be the case, with Bitcoin losing approximately 70 per cent of its value since the previous all-time high of nearly US$70,000 per Bitcoin. Altcoins have also not been spared in this bloodbath, with popular coins such as Litecoin and Cardano giving up most of their gains since the last bull run.
Examining the broader market dynamics, we also observe that the cryptocurrency market is still closely pegged to the stock market and heavily influenced by macro policy decisions. As S&P500 and Dow continue to sell off, investors are looking to flee high-risk assets and explore other traditional safe-haven hedges to weather what many believe will be a global economic maelstrom. Globally, the end of easy money with low interest rates on borrowing resulted in the aggressive tightening of monetary policy to control rampant and unprecedented inflation.
Market to remain volatile
To make matters worse, the crypto market has been buffeted by a series of controversies in recent times, including the Terra Luna-UST stablecoin depegging and eventual collapse, Celcius' freezing of customers' assets and filing for bankruptcy, as well as the liquidation bankruptcy of leading hedge fund Three Arrows Capital. These have severely dashed investor confidence in cryptocurrencies. With the confluence of high inflation, devaluation of currencies such as the British Pound and Japanese Yen, rising interest rates, and widespread fear of a looming recession, the cryptocurrency market is likely to remain highly volatile as it tries to find a price floor in the near term.
Yet, it is not all doom and gloom for the cryptocurrency market. After every winter comes spring, and with it, the blossoming of new opportunities. Indeed, experienced investors and traders often look for opportunities to make money in bull runs, bear markets, and ranging cycles. While investors looking to buy and hold may not be able to capitalise on the market moves in the near term, the buy and hold strategy has been one of the most successful ways of profiting from crypto in the long run (e.g. in a 10-year time frame). Opening an account at a crypto exchange in Singapore can be one way of growing your money in a time when conventional currencies are being eroded by high inflation. Alternatively, individuals can leverage cryptocurrency exchanges that provide trading platforms to trade the current market downturn and turn a profit by opening a short position if there is a good risk-reward return in the near term.
Conclusion
While no one can tell when the current crypto winter will end, the very best opportunities for investing often present themselves when the market is at its worst. Historically speaking, buying cryptocurrency that has a track record of resilience, such as major coins like Bitcoin, Ethereum, and Litecoin, during this market trough is typically a wise decision, as it can be thought of as purchasing currency at a significant discount from what prices would typically be by the next Bitcoin halving.
If you are thinking of buying the dip, look no further than Coinut, a regulated Bitcoin, Ethereum, and Litecoin exchange in Singapore and Canada. Specially designed with security, ease of use, and affordability in mind, sign up or contact us today for more information.
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