Rapid price recovery or the continuation of digital currency winter? Analysts respond

After experiencing a bearish trend for more than a year, an analyst believes that the cryptocurrency market is now likely to enter a long, low-volatility period. However, others disagree, thinking that improving macroeconomic conditions in the coming months will likely lead to a return of capital and a recovery in prices.

According to CryptoPotito, an analyst with the nickname Cold Blooded Shiller (Cold Blooded Shiller) on December 18 (December 27) compared the current market with the last bear cycle in 2018 and 2019. During this period, after a rapid downward movement, the market entered a state of stagnation for about 18 months in the form of suffering trades with very low volatility.

This analyst believes that if history follows a similar pattern, this may happen again as the cryptocurrency winter continues into 2024.

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Will we see a quick recovery?

However, there are other views that predict the cryptocurrency market conditions will improve faster. Kamikaz_ETH, a DeFi analyst, said that it is meaningless to compare the current market with the markets before DeFi summer (2020).

He said about this:

The digital currency winter will not last another year or two. Depending on how quickly we reach the bottom of the macro market, it will ultimately take several months.

He continued that every traditional financial company is gearing up to offer digital currency services, and that these assets already have many uses, most of which are based on the Ethereum network.

Kamikaze ETH added:

The years 2021 and 2022 were not the third cycle of the digital currency market; This period was actually the first cycle of digital currencies based on real applications.

Apart from the uses, the macroeconomic situation is also a factor affecting the digital currency market. Retail investors are unlikely to return to the market until they have extra cash to invest. This is unlikely to happen until inflation is under control and the cost of energy, water and electricity and household bills does not return to reasonable levels.

The current bear market is likely to continue without any real breakout for most of the next year. It seems that after falling 73% from the peak price, we have reached the bottom of the market. Of course, this doesn’t necessarily mean we won’t experience another fear-driven sell.

A look at the state of the digital currency market

The state of the digital currency market at the beginning of this week was stable and had very little activity. The total value of the market reached $840 billion when Asian markets started trading hours on Monday morning, which is very close to the bottom of the cycle last month.

According to CoinGecko, the price of Bitcoin has fallen to around $16,730, while the price of Ethereum is hovering around $1,180.