UpdatesNov 17, 2022

Crypto winter expected to last until 2024, say Coinbase analysts

The bear market will not leave the cryptocurrency market soon, according to analysts

According to experts from Coinbase, the so-called cryptocurrency winter may extend more or less until the end of 2023. In their latest report, they discussed a number of effects on the market from the catastrophic collapse of the FTX platform. Coinbase analysts pointed out that the failure of the third largest digital currency exchange has led to a liquidity crisis that is able to stop the development of the cryptocurrency sector for longer.

Crypto Winter may extend until the end of 2023

The virtual currency market has been stuck in a low point since the beginning of this year. The declines were deepened after the loud collapse of the Terra ecosystem, to which the LUNA cryptocurrency and the UST stablecoin belonged. This failure had extremely negative consequences for the entire crypto industry. As a result of the avalanche, many other companies filed for bankruptcy.

While at the end of the year it seemed that the worst was over, the reality was that the problems were yet to begin. This happened as a result of information about inaccuracies in the balance sheet of Alameda Research, which belongs to FTX. After the disclosure of this data, cryptocurrencies were hit hard again. In the face of the great liquidity crisis, Sam Bakman-Fried has filed for bankruptcy. After a few days, it turned out that the platform he was running was using investors' funds for its own "investment moves".

Coinbase analysts emphasized in their latest report that the specular implosion of the third largest cryptocurrency exchange created a liquidity crisis that could most likely contribute to the extension of the cryptocurrency winter even until the end of 2023.

As a result of the events described above, many individual and institutional investors are unable to withdraw their own funds from FTX. This situation also discourages newcomers from participating in the digital currency market. A team of Coinbase experts also noted the increase in the dominance of stablecoins to 18%. Given a number of aspects related to the cryptocurrency sector, they concluded that the bear market would not end in the coming months.

“The unfortunate FTX events have undoubtedly damaged investor confidence in digital assets. It will take a long time to reverse investor sentiment and it is very likely that it could extend the crypto winter by several months, possibly until the end of 2023. " Coinbase analysts said.

The report also emphasized that the collapse of FTX will most likely also affect a number of other companies that have interacted with this platform or the Alameda Research company.

The current situation on the virtual currency market

Currently, the price charts of individual cryptocurrencies show no signs of recovery. In the last 24 hours, the changes in the charts of the leading projects in this sector have been relatively small. FTX issues have hit the entire digital asset market hard, bringing some of them down to price levels not seen for a very long time. For example, the Bitcoin price lowered around $ 15.6 thousand for a single coin. Last time, the BTC rate was so low at the stage of 2020,

The data from the alternative.me platform shows that investors associated with the cryptocurrency market are immersed in extreme fear.