The crypto market got off to a green start this year, with a slight uptick from the final weeks of 2022. The green candles in the new year came partly due to investor confidence boosted by expectations that the Federal Reserve may ease interest rate hikes. Expectations, however, could shift due to reports on employment rates and the cost of consumer goods.
Meanwhile, several voices on Wall Street expect global markets and economies to head downward and possibly into a recession this year. On the other hand, Goldman Sachs and JPMorgan Chase anticipate the opposite. Moreover, Deutsche Bank expects the stock market to fall through 2023 and bounce back by the end of the year. Whichever way it goes, digital asset markets still have an uphill climb to recovery from the ongoing bear market.
Looking back at crypto bear market cycles
Regardless of what lies ahead, Gate.io Research, the market research arm of crypto exchange Gate.io, remains optimistic about the market’s future potential to recover and come back stronger. “Cryptocurrency has proven an ability to evolve and grow through downturns. In the past, each bear market precedes a bigger bull market where new developments and innovations stand out, and new adopters join the digital revolution.”
Previous crypto bear markets ranged from 260 to 415 days and averaged 359 days of a downward market. This range, along with Bitcoin halvings, is viewed as a rough indicator of when a renewed bull market is coming. The next Bitcoin halving is in 2024, and prior bull markets kicked off within 18 months after a Bitcoin halving.
The halving alone isn’t a perfect indicator. The bull market cannot be easily predicted. But, as Gate.io Research pointed out, the crypto market has been closely tied to the stock market through 2022 and is affected by similar global economic factors. A few factors that could turn the tide to look out for are a shift in economic policies and the crypto regulatory landscape becoming more defined and predictable.
Bear or bull, blockchain pushes on
Development and adoption take time, which the bear markets provide an abundance of. As the future holds bigger and better advancements in blockchain tech, regardless of market conditions, it may just be a matter of shifts in macroeconomics and global politics for confidence to be restored. This shift could begin to happen in 2023 or later; either way, time will tell.