Why the Crypto Market is Falling

2023 has started on a fresh and positive note for most of the cryptocurrencies. After bearing the brunt in the last year, most of the tokens have taken the road to recovery. However, the prices are still very much low as compared to their all time highs, which was witnessed in the 2021 bull run.

So how the other half of 2023 looks like, will it be a year of slow growth or will the cryptocurrency market be able to touch new highs and recover all the losses faced in 2022.The entire crypto market is swinging from side to side, comfortable in smooth curves and in limited range. After the FTX fallout in 2022, the trust on such currencies has been crushed and the market turned totally in the downside range with no signs of cooling down. However, 2023 gave a fresh opening to major digital currencies including Bitcoin and Ethereum and the crypto market has gradually started turning green due to the relaxed macroeconomic situation and cooling inflation. If we see the current volume in the digital market, then it firmly stands at $1.20 trillion as total market capitalization along with daily volume of $70 billion. However, if we talk about the world’s two largest currencies, then BTC and ETH are clearly topping the charts. Bitcoin has risen almost 80% this year and similarly Ethereum has almost shown a rally of 65% till this time of the year.

Crypto experts believe that the current situation is comfortable but still the road to recovery is very long. As most of the currencies still lag very much behind their all-time highs. Such as Bitcoin is still 50% down from it’s all-time high level which touched in November 2021 at $69,000, similarly Ethereum which is now trading at the levels of $1,900, touched the all-time high levels of $4,000, way back in 2021.

However, the good news is that, 2023 has been able to absorb all the major losses which the market suffered in 2022. If we look at the April figures, then BTC and ETH have surged 17% and 46%, which is a remarkable feat. Similarly Cardano (ADA) has also clocked more than 50% gain in the first four months of this year.

In March, the news of SVB Financial (SIVB) and other major U.S. banks sparked fears over the stability of the conventional banking system. However, the fallout in the banking sector dramatically shifted investor sentiments towards decentralized finance which propelled BTC to touch its highest level at $30,000, since June 2022.

That said, till now crypto market has undoubtedly responded positively to the collapse of SVB and hoping for a pause in interest rate hiking cycle in the U.S. amid tightening credit conditions and lending standards, but since crypto cannot sail alone in this boat, all the other financial assets have to follow the same sentiment for a balanced atmosphere.

Cryptocurrency, which is known for its extreme volatility, has witnessed a tumultuous time in 2022. The prime reason for the market downturn is the downfall of one of the largest global cryptocurrency exchanges, FTX. FTX’s bankruptcy, and its spat with Binance, has not only triggered a huge sell-off in the market but has also reduced liquidity from the crypto market.

Binance, the world’s largest global cryptocurrency platform, was all set to buy rival FTX, but soon walked away from the buyout deal proposal, citing multiple issues with FTX’s finances and regulatory investigations. Binance’s decision stunned the crypto investors and left Bitcoin to tumble to the lowest level in two years, which touched $69,000 in November 2021.

These surprising turns of events, led to a turmoil like situation in the crypto industry , which resulted in high level of distrust and skepticism among the investors towards centralized crypto establishments and on the regulation front.