Crypto winter sentiment could be ending as BTC reaches $23,000
The last crypto winter was in 2018, the current coldness in the market is seen as different from past events
As Bitcoin (BTC) hits a monthly high of $23,879, observers are asking if the crypto winter has come to an end, with this bear market perceived to be different to previous ones.
The price of BTC at the start of 2022 was $47,686 but the lead crypto has spent most of the last couple of months on a downwards trend according to CoinMarketCap.
The last crypto winter was in 2018, which followed a sharp increase of cryptos in 2017. The 2018 crypto winter was blamed on a large amount of Initial Coin Offerings (ICOs) which saw people invest money into crypto projects, most of which failed.
Clara Medalie, research director at crypto data firm Kaiko, told CNBC “The 2017 crash was largely due to the burst of a hype bubble.”
The current bear market has been attributed to macro-economic factors such as high inflation and central banks raising interest rates as CNBC stated BTC posted its worst quarter in more than a decade in Q2 of 2022.
Short lived crypto winter
Edward Moya, senior market analyst at the brokerage firm Oanda, believes if the price of BTC stabilises over the next few weeks then the crypto winter could end as quickly as it started. Moya told Time: “Wall Street is enjoying a positive risk-on mood that is good news for cryptos.” He said the crypto market was starting to look “attractive now that the economy is looking a little better as expectations for Fed tightening eased.”
Moya said the stock market in the US was rising which often leads to an increase in the price of cryptos. Investors feel more optimistic about the economy, inflation and rising interest rates, he said, which is a positive for risky assets that cryptos fall under. The more confident investors feel, the more likely they are to take on risk.
Marcus Sotiriou, a market analyst at the digital asset broker GlobalBlock, also told Time that crypto investors are hopeful that the recent crypto crashes, like BTC dropping to below $20,000, as it did earlier in July, have come to an end.
Sotiriou said that investors were feeling more bullish towards crypto because of the stock market rally in the US, Europe and Asia, and BTC has been closely tracking the stock market since the start of 2022.