Cryptocurrencies have given a lot to talk about, especially at the end of 2022, when different scandals of a different nature, in addition to the crisis of technology companies, triggered a fall in the values of companies of this type. Also, and by extension, long-term projects, such as institutional cryptocurrency investments, began to fall sharply, birthing the phenomenon known as Crypto Winter, as the press has called it. This fall has been sustained for quite a considerable time, considering previous history. And it is that there had not been a coincidence of situations so perfect to cause phenomena like this that is being experienced in the industry.
Exchanges are currently in the crosshairs of the public eye, with many awaiting an outcome. However, this outcome does not seem to be near, even with the arrival of 2023 and the various forecasts that indicate a recession for this year. On the other hand, there is the B side of the coin, in which it is expected that, despite not being as meteoric as in the past, the cryptocurrency market will reassess itself.
The theory is that, when the recession passes and certain circumstances improve, there could be a significant recovery in cryptocurrency values, but for this, several things must happen.
What Would Need To Happen To Make Cryptocurrencies Worth Again?
For the crypto market to gain relevance again, some issues that currently seem intractable must be resolved. The most obvious and the most complicated is the one that has to do with the conflict in Ukraine. Much of the blame for the decline of technology, in fact, lies with this conflict and the geopolitical changes it generated. There is a greater demand for energy and raw materials due to the modification of many contracts that had been in force for decades and that had to be broken after the start of the conflict, which generated uncertainty in long-term investments. If a ceasefire is achieved, even momentarily, cryptocurrencies would once again gain value, although it would not last that long, since this current crisis is multifactorial.
Secondly, the regulatory situation of the exchanges must be clarified, this would generate greater confidence, and would allow the market to recover. Currently, using isolated margin for crypto trading transactions is much more recommended, since the volatility and general downtrend make it more dangerous to use another type of margin. If these two situations can be brought under control, it is likely that we will see an increase in the value of many technological assets and greater confidence in the market.
Reduction Of The Monetary Volume
On December 14, 2022, the expected meeting of the FED took place with the different economic factors in the United States, and it was decided to reduce the rate of increase in interest rates. This movement is a torpedo for the stock market, but also a rest for the pockets of American citizens, who came to see the highest inflation in recent history of the United States, even exceeding that of 2008.
This will eventually reduce inflation around the world, but the stock market will continue to fall. Cryptocurrencies are famous for antagonizing the traditional market, and the only reason they have failed to do so this time around is the two conditions we mentioned earlier. If the stock market falls, and we receive good news regarding the two conditions mentioned above, we could see significant growth in the value of cryptos. Regaining market confidence is the goal that exchanges and companies responsible for altcoins must pursue if they want to recover all the money and market value they have lost in recent months.