Bitcoin is about to bottom. That is what many experts say. It means we are so close to facing another “crypto winter” with all weak players being washed out by deleveraging. The process is expected to drive BTC to its lowest low over the last few years hitting the $13,000 edge. For weaker hands, it will mean elimination.
The latest crypto winter has come up with a high-profile collapse for the entire crypto industry. It was mainly the result of some macroeconomic improvements. They have sharpened the trading pattern differently keeping the major marketplaces and hedge funds shaking. It is a sign of bottoming for not only Bitcoin but also for a broader cryptocurrency market.
A leading cryptocurrency wiped off more than 70% of its highest high back in November. Crypto markets lost about $2 trillion of their value. Investors have been trading BTC between $19,000 and $22,000 over the last few weeks. Traders are witnessing a total lack of catalysts for the market to go upside. They do their best to identify when it is going to hit the bottom.
When speaking about a crypto market eager to find a floor, we need to take into account several important factors.
The overall macro picture is gradually improving. It hurt BTC a lot. While inflation is soaring, the Fed and other central banks have nothing to do but intervene and hike the interest rate. It had a great impact on different risky assets including not only coins but also stocks.
As a result, we can observe crypto's correlation with major stock markets. Basically, we now watch them falling in tandem. Needless to say, investors are afraid of recession as well. On the other hand, if the Marco picture will keep improving, Bitcoin is very likely to see the bottom.
The amount of leverage has been one of the most important driving factors for crypto markets booming. Investors could choose from a variety of lending platforms, which promised increasingly high yields for those who deposit coins.
However, the situation is becoming a tight one for the majority of those platforms. Some of them are forced to stop withdrawals mainly because of liquidity issues. The BTC price crash actually ruined a business model utilized by the majority of lenders.
Generally, they take assets from their own depositories and provide them to those who also offer high yields. Then, the platform pockets the profit that is further used to pay yields for retail clients of its own.
While the deleveraging process is not over yet, weaker players are to face several difficulties. They are very likely to be wiped out of the market. The things may go even worth putting crypto miners at risk as well. They may turn out to be the next victim.
With the price going down, the operation costs will turn unprofitable considering the cost of high-power computers and specific software needed to validate transactions in coins. Mining startups may collapse leaving only the strongest market participants.
For investors, the situation does not mean a dead end. Crypto winter will not last forever. At some point, we will see the price bouncing back. On the other hand, traders can still find several ways to make a good profit even during a downtrend. Make sure you know how to benefit from the bearish crypto market.