The cryptocurrency market is finally seeing a bullish trend after a difficult and challenging period of downturns. This is due to global macroeconomic headwinds that are more relaxed and lower inflation, resulting in the global crypto market capitalization exceeding $1 trillion. Stable and high trading volumes have also contributed to this steady rise.
The stars of the crypto market – Bitcoin And Ethereum – have demonstrated incredible stability and both have managed to stay in a positive range for the past month. Analysts anticipate this rally to continue in the coming weeks, despite a slight improvement in macroeconomic conditions globally and in particular in key markets like the U.S. and UK.
Let’s look at the primary causes for the crypto market turning bullish and what the approach for investors should be in this unexpected crypto rally.
Crypto Markets On A Path To Recovery
In This year, major coins have led the way for the cryptocurrency market. The world’s number one cryptocurrency Bitcoin It rebounded quickly and traded close to $23,500, marking a positive change. From its lowest point in 2022 – $15,523, reached on November 9. BTC rallied almost 40% in the month of January 2023, peaking at $23,954 on January 29, 2023.
Likewise, Ethereum This currency has also been incredibly strong and has jumped nearly 5 percent in the last week. Current price is $1.644.
The Altcoins market has also performed excellently, and displayed major strength in the past two week. Since 2023, ADA has risen by more than 20% and SOL by over 20%. In addition, other altcoins like AVAX (82%), FTM (1143%) and especially APT (382%) have also seen impressive gains in January compared to last year. The Trading in a larger crypto market is now “green”It brings pleasure to crypto investors.
All The major cryptocurrencies experienced a significant correction until the end of last Year, after the collapse of crypto exchange FTX. November 2022. Crypto The market ended the year 2022 in an impressive way. HoweverIt is certain that bulls will come back in full force in 2023.
What Has Led The Crypto Market to Turn Bullish?
The The crypto market has observed some favorable signs, mainly due to the ease in macroeconomic activity. This has triggered the cost to increase. MoreoverThe crypto market’s overall trading volume has risen to record highs. June 2021.
This The crypto market rallied as soon as the U.S. Federal Reserve decided on a minor 25 basis points (bps) rate instead of 75 bps hike amid cooling inflation, solid employment data and recovery in GDP numbers. It It was to be expected that the Fed The bank might take a more aggressive approach and may increase the interest rate by 75 bps. ConsequentlyParticipants in crypto markets have welcomed the 25 basis point interest rate increase. This implies that the market will be more positive. Fed It could be on the side of victory in the fight against inflation.
FurthermoreThe U.S. rate hike decision has also directly influenced the dollar and weakened it significantly. Since the weak dollar has always boosted cryptocurrency prices,
Not Not only the U.S., but also numerous macroeconomic factors showed slight signs of recovery in China These are the major global economies. In addition The reopening China’s borders almost after three years of Covid-19 Closure and other measures by central banks to tackle inflation have improved investor confidence in both the cryptocurrency and traditional markets.
Sentimental Shift in Crypto Market
The past five to six months have been an extraordinary journey for the cryptocurrency market. Global financial instability and the decline of FTX have put a strain on the markets. Here’s a look at the market capitalization from November 2022 to February 2023:
Crypto Market Capitalization
What Indian Investors Should Consider During The Crypto Rally?
The potential increase in crypto values have attracted both high-net-worth individuals and institutional investors to capture some short-term trading gains. It is important to stick to these simple rules and strategies while investing:
- Diversify your portfolio by investing in different types of investments.
- Spread your risk of experiencing a possible downturn in any crypto.
- Conduct your own research (DYOR) and keep up to date with industry news.
- Don’t rush into making decisions or be pulled in by the hype.
- Maintain a disciplined approach to investing.
- Prioritize security by keeping your crypto assets safe in secure wallets with backups and security measures.
Experts suggest caution as any new development in the crypto space could cause a shift. According to the research team of one of India’s largest crypto exchanges, CoinDCX, “This momentum can be treated as a mid-bear market rally. Investors should limit small-cap token exposure and deploy the majority to projects that are fundamentally strong and continuously developing.”
Raj Karkara, COO of Zebpay, recommends an education-first approach as it is essential to stay informed on news and technical analysis. “It is essential that investors fully comprehend the fundamentals of a crypto token before investing. There are various investment strategies that can be used during a rally, so investors can make sensible decisions.”
The CEO and founder of Taxnodes, Avinash Shekhar, encourages Indian investors not to invest based on popular stories. Instead, they should take the time to understand the fundamentals of crypto. “Investors should start with small amounts and gradually increase their exposure by making educated investment decisions rather than wagering on speculation. Cryptocurrencies are currently a volatile asset class, but with the right innovation and regulations, the potential of the Web3 space will be unleashed and the asset class will mature.”
Undoubtedly, the crypto markets are recovering from the crash, yet there is still a sense of “fear” within the crypto community. It is my strong belief that the sentiment is still mixed. The Indian crypto industry was hoping for some tax relief from the government, however, the Union Budget 2023, announced on February 1, 2023, did not mention any tax relief for the sector. There are still questions about the tax rates and regulatory framework in India. But, given the global macroeconomic environment, trading volumes have increased. Indian exchanges are expected to experience an uptick from rock bottom prices. Investors have been advised to continue trading cautiously and vigilantly as it is uncertain if the crypto rally will remain.
