When Will Crypto Winter End?

The recent price movements in the crypto market suggest that the crypto winter might already be over. The notion is further underscored by the increased institutional interest in Bitcoin, with several spot ETF applications awaiting review as of this writing.

Last year, the downturn in the crypto markets saw the total crypto market cap shrink from $2.3 trillion in January 2022 to just $823 billion by the end of the year. The reasons for the nearly $1.5 trillion drop in the total market value of digital assets are multi-faceted and include broader macroeconomic factors, such as the energy crisis and high interest rates, and crypto-specific factors, such as the collapse of FTX and Terra.

However, since the start of 2023, the total crypto market capitalization has strengthened by a whopping $475 billion, largely due to large price gains recorded by Bitcoin (BTC). A nearly +50% increase in total market value is clearly an overwhelmingly bullish indicator, but can we expect the positive market trend to continue?

In this article, we are going to examine whether the crypto winter has ended and what we can expect in the coming months.

Has the crypto winter ended? These factors paint a bullish picture

There are several indicators that suggest that the crypto winter has ended. Renewed institutional interest, surging prices led by Bitcoin breaking +100% YTD gains, and considerable improvements in investor sentiment are all indications that the bearish period that started in early 2022 is behind us.

Renewed institutional interest in crypto

Perhaps the main catalyst that has sparked explosive price growth we’ve seen in the past couple of weeks has been a series of spot Bitcoin ETF applications from large financial players like BlackRock and Fidelity Investments. Their pursuit of a spot Bitcoin ETF has been seen by many as a confirmation that traditional financial institutions believe crypto is here to stay and is a viable asset class for both retail and institutional investors.

Currently, the only barrier to a spot Bitcoin getting listed is the Securities and Exchange Commission (SEC), which believes that crypto is too volatile and susceptible to price manipulation to warrant a spot ETF. Interestingly, future-based Bitcoin and Ethereum ETFs have been approved by the SEC in the past, which goes against the logic that a crypto-focused ETF might be particularly susceptible to price manipulation. Otherwise, they should never have approved the futures ETFs in the first place.

While further examination of the Bitcoin spot ETF might be beyond the scope of this article, you can check the video below for more information on why Bitcoin ETF is such a big deal.

Bitcoin leads a broader crypto rally

In the past month, we’ve seen particularly impressive price movements from virtually all cryptocurrencies. Bitcoin has led this rally with a nearly +26% price increase in the past month. The world’s oldest currency has surpassed $35,000 during the period, the highest price point in more than 18 months.

Other major currencies have followed in Bitcoin’s footsteps – for example, Ethereum gained +11%, BNB +8%, and XRP +15%. Solana has been particularly impressive and gained more than +70%.

Positive developments on the legal front

There are several encouraging signs that point that things could be moving in the right direction for crypto assets. Earlier this year, a judge presiding in the SEC vs. Ripple case ruled that Ripple’s sale of XRP to investors on exchanges could not be considered a breach of US securities laws, which was a major win for all digital assets that started out with crowdfunding campaigns (think of various ICOs, STOs, etc.). The ruling sparked a nearly +100% rally in the price of XRP mere hours after it became public, hinting at what could happen to XRP price after the SEC lawsuit.

In addition to Ripple’s legal success, we’ve seen Coinbase successfully fight its battle against the regulator in the past couple of months, arguing that the SEC has designed securities laws in a way that makes it impossible for crypto firms to follow. Interestingly, the price of Coinbase stock gained over +80% since the SEC filed its lawsuit, which speaks volumes about the market’s conviction that the exchange will likely prevail in the case.

What lies ahead?

So, with the crypto winter (most likely) over, what can we expect next? If history is any indication, more bullish activity. Historically speaking, Bitcoin halvings have been the most important cyclical market events in crypto, with each halving cycle pushing the price of digital assets to new heights.

According to our Bitcoin price prediction, that’s exactly what we can expect after the 2024 halving. BTC is forecasted to surpass its previous ATH and reach a new peak above $70,000 by late April 2024. After that, more bullish activity could take Bitcoin well into the six-figure territory for the first time ever.

Like Bitcoin, Ethereum seems poised for a breakthrough following next year’s halving event as well. According to the Ethereum price prediction algorithm, the world’s second-largest cryptocurrency will retest resistance at $3,600 shortly after halving, and proceed by reaching an ATH above $5,400 next November. It is worth noting that the algorithm expects ETH to reach a 12-month peak above $6,300 in June.

The bottom line: Crypto winter is (probably) over

As things currently stand, it’s hard to argue that the crypto winter is not already in our rearview mirror. Positive price activity, an increase in institutional interest, and encouraging signs on the legal front all paint a very rosy picture. Not to mention that the next Bitcoin halving is just around the corner, which has historically been the biggest catalyst for crypto markets.

One thing that must be noted, which makes us a bit hesitant to proclaim crypto winter as definitely over, is that the current price levels are still way below their peaks in November 2021. While Bitcoin and Ethereum are trading “only” 50-60% below their ATHs, currencies like Cardano, Dogecoin, Bitcoin Cash, Polkadot, Avalanche, and many others are still in the 90%+ loss territory. Even with that as it may, we can confidently say that the broader crypto market has again successfully beat the notion that “crypto is dead”, as so many times before.

Hopefully, we’ll see Bitcoin and Ethereum lead the way for other cryptocurrencies and kick-start the next crypto bull run. In the meantime, check out the following video, in which we discuss how Bitcoin might behave after the next halving and some plausible market scenarios we could witness.

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