The crypto market has been hit hard by the bear market, with investors feeling the heat as prices continue to drop. Many are left wondering when the market will bounce back, or if their investments will recover at all. The bear market has been particularly brutal, with the value of many digital assets plummeting to all-time lows. It's a tough time to be a crypto investor, but it's important to remember that markets are cyclical and that there will be a turnaround. Some investors are wondering when will crypto prices go up?
The Crypto Market Is Cyclical
The market being cyclical means that it moves in cycles, with periods of growth followed by periods of decline. This is seen in all kinds of markets, including the stock market and the real estate market. In the case of the crypto market, this means that there will be periods of bullish behavior, where prices are rising and investors are optimistic, followed by bearish behavior, where prices are falling and investors are more cautious.
Bitcoin Halving
One important factor that affects the crypto market's cyclical nature is the halving of bitcoin, which occurs roughly every four years. The halving is an event that reduces the rate and supply at which new bitcoin is generated, which has an impact on the price of bitcoin. Generally speaking the halving is the kickstart of the bull run in the crypto market, as the reduced supply of new bitcoin leads to an increase in demand and therefore a rise in price. In my opinion the bull run starts once we hit a bottom in the bear market and we slowly start to move up in price for the next year and a half. It won't feel like a bull run until we hit that parabolic stage where euphoria kicks in.
Crypto Bear Markets Are Tough
Bear markets can be tough for investors for a number of reasons. One reason is that they can lead to significant losses for investors who are holding assets that are losing value. This can be particularly frustrating for investors who were expecting the value of their assets to continue to rise.
Another reason bear markets can be tough is that they can create uncertainty and cause investors to question their investment strategies. It can be difficult to know how long a bear market will last or how far asset prices may fall, which can make it challenging for investors to make decisions about when to buy or sell.
Crypto bear markets can also be tough for investors because they can create a negative mood and sentiment in the market. This can lead to a lack of confidence among investors and make them more hesitant to take risks, which can further contribute to the downward trend in prices.
FTX Collapse
On December 13, 2022 The Securities and Exchange Commission today charged Samuel Bankman-Fried for defrauding investors to the tune of some $1.8 billion.
Bankman-Fried is accused of concealing the diversion of FTX customer funds to his privately-held crypto hedge fund, Alameda Research, as well as giving Alameda special treatment on the platform, including a virtually unlimited line of credit and exemption from certain risk mitigation measures. Bankman-Fried is also accused of using commingled FTX customer funds at Alameda for undisclosed venture investments, real estate purchases, and political donations. The SEC is seeking injunctions, disgorgement of ill-gotten gains.
FTX Contagion
Solana has seen its market capitalization drop from over $55bn in January 2021 to just above $3bn at the end of the year, following the bankruptcy of the FTX exchange and the criminal fraud charges faced by its founder Sam Bankman-Fried. Bankman-Fried's companies held $1.2bn worth of Solana tokens and associated assets in June 2021. The token has declined by over 30% in the last week, while Ether has shed 1.7% and Bitcoin has dropped 1.2% over the same period. Two of the largest non-fungible token projects built on Solana announced their migration from the platform on Christmas Day, but the slide in Solana's value has continued.
Solana's developers have dropped from 159 in October 2021 to 67, according to Token Terminal, while the cryptocurrency has also seen a continued flight by investors over the past few days. Despite the collapse of FTX, Multicoin Capital, a cryptocurrency investment firm, has maintained its bullish outlook on Solana, stating that the crisis has highlighted the need for a return to decentralised finance and self-custody.
In conclusion, it is possible for investors to generate great wealth during bear markets while prices continue to drop, but it requires careful selection of investments and patience. Bear markets, or periods of declining asset prices, can be difficult for you as you might be tempted to sell off your holdings in fear of further losses. However, those who are able to resist this temptation and choose wisely may be able to reap significant rewards as prices eventually recover.
It is important for investors to do their due diligence and thoroughly research potential investments before committing their money, as well as having a long-term investment strategy in place. Additionally, it is crucial for investors to be patient and not get caught up in the short-term fluctuations of the market, as bear markets can often be followed by bull markets, or periods of rising asset prices. By being strategic and patient, investors can position themselves to potentially make significant gains during bear markets.
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