Cryptocurrencies have experienced high volatility, but Blockchain is moving forward. Here we tell you all about it.
Last week the crypto market experienced a rather unstable period: The FED stimulated volatility by raising interest rates by 75 points.
Beyond the current volatility, we live in a key stage , as we will explain in this article. For this reason, we will not only analyze the behavior of the crypto market today, but also the historical stage that cryptocurrencies are experiencing today.
Precisely the price of the main cryptocurrencies fell during Friday; however, prices subsequently stabilized again. But all this is part of the consequences of the high inflation that the world is experiencing with the policies of interest rate increases applied by central banks.
Still, despite the difficult global economic outlook, the crypto market capitalization seems consolidated above $900 billion. Since every time it gets close to the $800 billion line, it continues to rebound strongly. Similarly, in recent months, when said capitalization crossed one trillion dollars, there was a large price correction.
Speaking of which, prices of the major cryptocurrencies swung between weekly highs and lows in the days following Jerome Powell's speech. Especially Bitcoin and Ethereum. This last one presented a strong correction after the great update The Merge.
For its part, Bitcoin looks strong around $19,000 and $18,000. In the short term it seems that it is difficult to hit new lows. While Ethereum, likewise, appears to be consolidating around $1,300.
However, winter is not over yet, as US inflation rates in the coming months will be important in determining the FED's next steps . In the worst case, a strong recession could lead cryptocurrencies to experience new yearly lows.
For all these reasons, investors should focus on the inflation rates in the United States in the coming months.
Crypto market versus governments
A very interesting phenomenon that we are experiencing at the moment and could increase in the coming months, are the different disputes that cryptocurrencies are generating at the government level. This phenomenon is not new, however, today more than ever we are experiencing a true legal battle of cryptocurrencies vs. governments.
Some of the most outstanding and current events in this area are, first of all, the executive order of President Joe Biden on a guarantee of responsible development of digital assets. Said order has led federal agencies to achieve a joint fact sheet for the regulation of cryptocurrencies.
However, many analysts are of the opinion that harsh and unfavorable regulation is unlikely . Since the "lobbyists will do the job very well in the corridors of congress."
On the other hand, the SEC has also hinted at regulating smart contract platforms, which has drawn fears of censorship. Although some analysts think that platforms like Ethereum and Cardano will be able to respond well to such censorship attempts by improving their decentralization, which will happen in the next updates.
2023 could be the year of Blockchain
Even though The Merge didn't cause an outrageous rise in the price of Ethereum, it has set a good precedent for Blockchain technology: What's next for the big smart contract platform is the Shanghai upgrade . Which plans to increase the speed of the network up to 10 times. This update could arrive in mid-2023, which could generate a new period of optimism for the crypto market in the coming year.
Another major update happening right now is Cardano's Vasil, who has completed his first stage and is heading into the second of his update.
After “Vasil” is completed, the next update will be “Hydra” and “Mithril”, which will improve network scalability and convenience.
Another interesting fact is that the regulations currently being processed could probably make room for new institutional investors. Here's what FTX CEO Sam Bankman-Fried has to say.
2023 looks promising for the crypto market, however, the danger that inflation leads cryptocurrencies to hit new annual lows in the coming months is latent. It is necessary to control inflation, before talking about a new upward cycle.
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