How will cryptocurrency prices move in 2022?
In 2022, cryptocurrency prices fell sharply in large parts. In November 2021, most major coins hit their all-time highs. The bear market then set in and by the turn of the year ensured that prices were already falling sharply. These crashes then continued into 2022.
In the first half of 2022, we saw massive losses in many cryptocurrencies. Especially in January and then later in May and June there were severe crashes. In mid-June 2022, many cryptocurrencies saw a 2022 low. After that, we saw prices stabilize in the third quarter. This stabilization continued into the fourth quarter.
Why have prices fallen so sharply lately?
The losses in recent months can be explained primarily by the onset of the bear market . Bitcoin and thus also the other cryptocurrencies see a 4-year cycle in which a bull market alternates with a bear market. This cycle is determined by the Bitcoin Halving , which takes place about every 4 years.
The bull market last started in 2020 with the last Bitcoin Halving. Especially in 2021, the bull market was in full swing and prices saw very strong increases. But then the bear market suddenly set in. This transition is always very sudden and the sharpest drops always come at the beginning of the bear market.
In the past few months, we have seen massive losses in cryptocurrencies. The bear market is in full swing. But the phase in which prices implode on the market is already behind us. The market has stabilized. But the bear market could continue for some time.
A bear market has always been an event in recent years, which lasted for several months or even 1-2 years. However, we must note that we will soon have 1 year of bear market behind us. It is therefore unclear how cryptocurrencies will continue in 2023. Are we still seeing low prices or can cryptocurrencies rise again in the coming months?
What are the reasons why cryptocurrencies could rise again in 2023?
At the moment the bear market is still so dominant that we hardly see any price movements upwards. But it doesn't have to stay that way forever. There are good reasons why cryptocurrency prices could explode again in 2023. We want to present 3 good reasons for this in more detail.
1. Price increases in the last bear market
2018 saw the last major bear market as Bitcoin fell from nearly $20,000 to $3,500 a few months later. However, we did not only see the first stronger gains after the Bitcoin Halving in 2020, but already in 2019, when the prices began to move upwards again.
Cryptocurrency millionaire
For example, the Bitcoin price of $3,500 at the beginning of 2019 was able to make massive gains again in the summer of the same year. The Bitcoin price rose to over $10,000 and tripled within a few months. After the Bitcoin, the Altcoins followed with the price increases.
Of course, bear markets can behave differently in each cycle. But often we see parallels between the trajectories between different cycles. The year 2019 has shown that increases are possible again even before the Bitcoin Halving in the bear market.
2. Decoupling Bitcoin from traditional markets
An interesting development in recent years has been the increasing dependence of the Bitcoin price and thus the prices of most cryptocurrencies on the prices of tech stocks from the USA. Overall, bitcoin has become more dependent on the classic financial markets.
Dependence increased as more institutional investors invested in the market and Bitcoin financial products such as ETFs entered the market. So it happened again and again that Bitcoin fell when prices on the stock markets fell. In principle, the prices of the cryptocurrencies should counteract the prices of the traditional assets.
Bitcoin Shares
In 2023, there could be a decoupling from traditional investments. In recent months, many institutions have been selling bitcoins, and with interest rates rising, they should focus less on cryptocurrencies as risky investments in 2023. This could ensure that decoupling occurs again and that Bitcoin behaves similarly to the 2017 bull market.
3. Alternative investment in inflation / recession
Bitcoin and other cryptocurrencies could become more popular with a deepening recession in 2023. During this time, investors are looking for alternative assets in order not to lose the value of their assets. In this case, it could actually happen that cryptocurrencies move in value against classic assets. A recession could lead to an explosion in the value of cryptocurrencies.
Which cryptocurrencies should you invest in for 2023?
If we see cryptocurrencies rallying again in 2023, you should have built a balanced portfolio. Diversification is particularly important in a risky investment like cryptocurrencies. We therefore recommend a mix of Bitcoin, Ethereum, other alt coins and, to a small extent, meme coins.
You should note that cryptocurrencies are still associated with a great risk and no reliable predictions can be made about the performance. But an investment in various cryptocurrencies could be particularly worthwhile now, given the low prices.
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