Cryptozyme close: When will a new period of protracted recession begin in the cryptocurrency market? – Bits Media

Will the first cryptocurrency be able to reverse the current trend in the near future or will the cryptocurrency market face a new period of decline??

Bitcoin is unable to overcome bearish pressure for the second month, and cryptocurrency market participants increasingly began to think about the possible another crypto winter is approaching. Director of Alfacash
Nikita Soshnikov described his vision of the situation.

Having updated the next historical maximum at the level $68000 in November of this year, Bitcoin has been showing downward dynamics for the second month in a row. Since the beginning of December, Bitcoin has completely dropped below $50000, caught between the marks in $45000 and $49000. The first cryptocurrency has not been able to go beyond the boundaries of this price corridor for two weeks now..

If in November most analysts assumed a scenario for Bitcoin growth to $80000-$100000, now there are more and more doubts about the continuation of the “bullish” cycle. The CEO of the Kraken cryptocurrency exchange, Jesse Powell, called the onset of crypto winter “possible” in the near future and drew attention to the fact, that the cryptocurrency market has historically always been subject to cyclicality, first of all, related to Bitcoin halving, which occurs every four years.

There are several prerequisites for the imminent onset of crypto winter:

• Cyclical growth of the cryptocurrency market, caused by a four-year cycle of changes in the calculation of rewards for miners in the Bitcoin network;

• Market overheating, which is demonstrated by a decrease in appetite for cryptocurrencies on the part of institutional investors;

• Regulatory pressure on the cryptocurrency market, especially from the American authorities, actively began discussing a bill to tighten requirements for issuers of stablecoins;

• Winding down of economic stimulus and asset buyback programs in the United States, initiated by the Federal Reserve (FRS) USA;

• Increasing inflation risks around the world and in the United States in particular and expectations of an increase in the key rate in 2022 year in the USA, which will inevitably lead to a decrease in the growth rate of the stock market, and behind it the crypto market.

But it would be reckless not to notice the important differences between the current recession and the periods, preceding previous crypto winters:

If we look at the history of the cryptocurrency market, then see, that this is not the first or second period of a long recession. Previous crypto winters covered the crypto market in 2013-2015 years and in 2018-2019 years. Each time the Bitcoin rate lost from the last historical maximum over 80% its price. And each time, Bitcoin growth resumed six months before the next halving – cutting the miners' reward for the mined block in half.

It is also worth paying attention to, that the growth rate before halving was traditionally inferior to the growth rate of the cryptocurrency after halving. This is a trail of influence of halving on the cryptocurrency market that has already become a tradition., which can last up to 12-18 months after the remuneration reduction itself. Six months before the halving 2016 Bitcoin has doubled its price, having reached $600. Later 12 months it has quadrupled in price, and later 18 months after halving 2016 of the year – went up in price 30 time.

After the peak in December 2017 year, the price of Bitcoin gradually began to decline. A year later – In December 2018 of the year – he fell lower $4000, whereas in December 2017 bargained for $18000-$20000. If we draw a parallel with the previous crypto winter, now is just that turning point, which in 2022 year will turn into the dominant downward trend in the cryptocurrency market.

About the dominant bearish sentiment among market participants, including institutions, Statistics on Bitcoin futures trading on the Chicago Mercantile Exchange also testify.. Last week, BTC futures began to trade at a discount relative to the current price of the cryptocurrency.. for instance, discount on a monthly contract with execution in January 2022 reached the year 14%, and three-month Bitcoin futures were trading at a discount of up to 3%.

According to open CME data, it is clearly visible, that until May 2022 Bitcoin futures are selling lower this year $50000, and only annual futures for December 2022 – above this mark. Considering, that over the past almost two years, institutional investors have increased their influence on the market, You can assume, that bearish sentiment reigns among institutionalists as well.

In the second half 2022 year, we can expect a multiple drop in the price of the first cryptocurrency. The scenario about the imminent onset of crypto winter is also supported by, that the Bitcoin rate has dropped lower $48000 – level of the 200-day moving average, which, again, has traditionally shown reliable results for determining the current trend in the cryptocurrency market, despite its volatility and not being subject to conventional technical analysis.

I suppose, that crypto winter is really on the doorstep, but the exact timing of its onset is difficult to determine. They largely depend on the actions of American regulators regarding economic incentives, rate of increase in the key rate, as well as the general sentiments of crypto market participants.

I would call the lower limit of Bitcoin's fall during the crypto winter $28000. Bitcoin will not be allowed to go below this mark, who bought on $30000, as well as miners, for whom it is simply not profitable to sell mined coins at low prices. As soon as the rate tries to go lower, they will immediately buy him off, who understands, that the dominance of bears does not last forever and that the market has already experienced more than one crypto winter.

Any crypto winter is an opportunity to profitably enter the asset. The main thing is not to give in to panic selling and remember, that HODL is so far the most effective strategy in the cryptocurrency market.