When will crypto rise? The crypto market is currently in a state of extreme volatility, but if the impending economic recession continues to push up the cost of mining, it may eventually become stable. This article will explore a few potential triggers for the crypto market to rise again. May is a particularly good month for Bitcoin, and December end is another. While these are very difficult to predict, they could make the crypto markets unstable in the coming years.
May is a good month for Bitcoin
May is traditionally a good month for Bitcoin to rise. Senior market analyst at FxPro, Alex Kuptsikevich, predicts Bitcoin will trade between $32,000 and $48,000 by the end of the month. He bases this prediction on the average rise and fall of 27% per May. That would give Bitcoin a total gain of 11% for the month. And if Bitcoin rises this May, that would mean a massive jump in the price of the cryptocurrency.
However, some analysts are not so sure that May will be as lucky as previous months. While cryptocurrency tends to follow the stock market, other factors may have an impact on its performance. The aversion to risky investments in the U.S., a rising interest rate environment, and general risk-averse sentiment are all likely to affect the price of Bitcoin. This is why the median move in Bitcoin in May is more likely to be more reliable than the average.
December end or January 2023
The first question is “When will crypto rise?” The answer varies wildly from year to year, but most experts agree that it will be before the end of this decade. The reason is twofold: inflation is a major factor and the currency will not rise much in the next two years. At the same time, the cryptocurrency market is susceptible to economic recession. Inflation, which is a persistent problem, will continue to cause downward pressure on the cryptocurrency market.
Several factors drive cryptocurrency price movement, including demand and supply, investor sentiments, economic cycles, and news. Bitcoin, for example, has become a mainstream digital currency and is subject to the same factors as other currencies. In December of 2021, the price hit an all-time high of $30,000. However, the cryptocurrency market declined significantly, alongside stock markets. Many investors had hoped for a rebound to $30,000, a target it missed. The emergence of the COVID Omicron variant, which pushed the crypto market into a huge economic imbalance, had spooked the markets and pushed prices even lower.
Imminent economic recession may make crypto markets fragile
The rogue billionaire who tweeted about his company’s decision to stop accepting Bitcoin has left economists wondering whether cryptocurrencies will cause the next recession. They point to the fact that cryptocurrency mirrors subprime mortgages. The resulting fall in prices and value could trigger a systemic crisis. As such, the imminence of a financial recession may make crypto markets vulnerable. To combat this risk, government-backed cryptocurrencies could be a viable solution.
During the recent COVID-19 recession, bitcoin hit an all-time high, and the equity markets were crushed. After the Fed injected stimulus, the stock market bounced back to normal levels. But an impending global recession could cause a “perfect storm” for markets, testing established institutions and pushing them to the brink. And the Fed is already sweating the potential of a recession in the near future. Its chief economist, Christine Lagarde, has warned that a global recession could result in a crash on par with 2008.
Mining costs increase
There are a number of reasons why the cost of mining may increase. In this article we look at some of these factors. The first reason is upstream price pressure. It is very common for utilities to renegotiate their contracts midway through the mine life cycle as energy costs increase. Another reason is a drop in the price of natural gas. While these costs will increase, they will not be as severe as those resulting from an increase in energy prices.
The total cost of Bitcoin mining is estimated by determining the minimum cost of each hash multiplied by the number of hashes performed over a period of time. This calculation shows that the total cost of mining per day in USD is increasing from three dollars in 2010 to more than four million USD in early 2020. While these numbers may seem low, the actual cost is likely much higher. Changes in energy prices and hashing rates are the primary factors that determine the rate of mining costs.
Regulation could negatively impact demand
The current federal regulatory framework for cryptocurrency is lacking. Although the SEC and CFTC are charged with overseeing the financial markets, these regulators cannot regulate cryptocurrency exchanges. However, the recent announcement by Gensler of the new SEC chief of staff indicates that some cryptocurrency-related products may be subject to increased taxes. This could have negative implications for the crypto-asset industry, as negative externalities can pose sunk costs to society.
There are many risks associated with regulation, especially when it comes to cryptocurrencies. While the cryptocurrency market is booming, regulators have to be cautious of cross-border spillovers. For instance, if regulation leads to increased money laundering, people might flock to jurisdictions that have fewer regulations. Furthermore, the risk of illegal activities involving cryptoassets is heightened if regulators fail to implement stricter regulations.