Key points to remember
- After a rocky 2022, prices for most cryptocurrency coins have risen in 2023 as the market attempts to rebound from the Luna crash and FTX implosion.
- Lawyers behind failed crypto exchange FTX have announced that they have recovered over $5 billion in crypto assets and cash that could be used to pay off creditors.
- With inflation cooling from 7.1% in November to 6.5% in December, this gives hope that the Fed will slow with monetary tightening, which would drive more investors back to riskier assets like stocks. digital currencies. Cooling inflation numbers helped push Bitcoin temporarily above $19,000.
After a turbulent year in the cryptocurrency space, it looks like the prices of some of the biggest coins are finally showing signs of recovery in 2023. Experts estimate that around $1.4 trillion has been wiped out of the cryptocurrency space. crypto space in 2022. With the Luna collapse and the FTX implosion, it was feared that we were in for a long crypto winter.
In an interesting turn of events, crypto prices rose after lawyers for FTX announced that they had found around $5 billion in liquid assets that could be used to pay back clients. Then inflation data came out on Thursday and showed signs of a pullback, leading many to believe the Fed would slow its pace of rate hikes.
We will dig deeper into why crypto prices have risen, and how Q.ai can help you.
Why is crypto in place?
While we haven’t seen crypto prices skyrocket like we did during the pandemic months, there are signs of revival with small glimmers of hope. There is some good crypto news that we will discuss.
FTX finds $5 billion
FTX Group advisors have found over $5 billion in crypto assets and cash that could be used to pay back clients and investors. Advisors also discovered a large amount of other crypto assets that were illiquid and harder to sell due to market impact.
Exchange advisers sifted through confusing financial records to figure out how to proceed. FTX attorneys also told the bankruptcy court that they had identified 9 million customer accounts in the wreckage. The recovered funds helped bring the crypto market to the fore, as many thought the assets had completely disappeared.
General macroeconomic factors
Cryptocurrency is strongly linked to inflation data, as economic factors play a major role. The most recent CPI data was released on January 12 and the news was mostly positive, with inflation falling from 7.1% in November to 6.5% in December. Headline CPI fell 0.1% in December alone. This news gives cause for optimism as it is hoped that the Fed will back off from aggressive rate hikes.
There is also speculation that investors may return to speculative assets now that it looks like the Fed may slow down with rate hikes. We saw bitcoin finally return to the $19,000 mark for the first time since November 8, 2022, after the FTX implosion.
Binance expects a wave of hiring this year
We have seen many crypto exchanges and lenders completely wiped out in 2022, and we are still feeling the consequences. However, in a surprising intrigue, it looks like Binance will increase its workforce by 15-30% in 2023 to better prepare for the next bull. This news was extremely welcome as the space was filled with news of job losses and suffering.
Which pieces are soaring?
We decided to highlight some of the coins rebounding in 2023 as the overall crypto market reacts positively to recent news. All prices are as of the morning of January 13, 2023. (Please note that cryptocurrency prices fluctuate wildly.)
We wrote about the Ethereum merger a few months ago and continued to follow the price. While the coin is significantly down from its all-time high of $4,865.57, it has risen around 12% year-to-date to around $1,412.
Many pundits have wondered if the price of bitcoin will return to $19,000 after the FTX implosion sent the entire crypto market plummeting. As of this writing, bitcoin is hovering around this price. While it is obvious that bitcoin is not an inflation hedge, it is hoped that the price will continue to rise based on positive economic data.
Cardano has been bouncing back lately and the coin is up around 33% for the year. Charles Hoskinson, the founder of Cardano, has indicated that an upcoming smart contract blockchain update is almost ready. The “Voltaire upgrade” would have millions of users collaborating on the Cardano ecosystem.
As always, we suggest that you track cryptocurrency prices yourself to gauge fluctuations. For example, although bitcoin is hovering around $19,000, it has fallen sharply from its all-time high of $68,990 in 2021.
Which parts are not going well?
It’s probably easier to look at the struggling cryptocurrency coins instead of listing those that are thriving, as the prices of most coins have fallen sharply.
Solana saw its value drop as the coin was strongly linked to FTX, and this connection led to a sharp drop in prices in November. Although the token has risen slightly in recent days, we can only ignore the current price of around $16, which is significantly below the all-time high of $259.99 we saw in November 2021.
Binance Coin (BNB) has suffered recently as investors lost some confidence due to various allegations against Binance, the crypto exchange that uses BNB as its native token. Forbes recently wrote about how the coin lost 29% of its value in two months, and they estimated that Binance had 29 million tokens left.
It bears repeating that it’s not over until it’s over. Although these coins have lost value, the possibility of a rebound is not out of the question as we see crypto prices slowly recovering from the black swan events.
What’s next for crypto investors?
Have you thought about investing in crypto? Are you a crypto investor? Here are some considerations for crypto market participants heading into 2023.
Inflation data and rate hike responses are still key
While crypto was meant to be an inflation hedge, it turned out to be another speculative asset that fluctuates with macroeconomic conditions. CPI data comes out every month and all markets (including crypto) react to this news.
Although this month’s inflation data was considered positive, we cannot ignore that we are far from the ideal inflation target of 2%. Then the next shoe to fall is the Fed’s reaction as the next FOMC meeting is scheduled for January 24 and 25. We will know if the rate hikes will continue or if they will be halted for the time being.
Coinbase continues layoffs
We cannot write about crypto investing without discussing Coinbase and their aggressive layoffs. The company announced it would cut a further 20% of its workforce by laying off 950 employees in a new round of layoffs. This is the second round of major layoffs for the crypto exchange, as they already laid off around 1,100 employees last June.
Trust in crypto is down
It’s hard to be optimistic about crypto after the collapse of Luna and the FTX debacle. Trading volumes are down as consumers are cautious about investing in the crypto space after the amount of money that has been wiped out over the past year.
We will continue to monitor the aftermath of the FTX debacle as attorneys attempt to recover funds to repay creditors.
The most critical issue now is the idea of the crypto fund. We have seen the lowest prices for major forms of cryptocurrency. Some analysts believe we’ve hit rock bottom, while others aren’t so quick to confirm that notion. The truth is that this space is filled with volatility and speculation. The price swings of highly speculative assets could be wild.
How should you invest?
As you can see by the price fluctuations of these digital assets, investing in crypto comes with volatility and uncertainty. Prices fluctuate constantly because the crypto market never closes and there is always new information coming out.
If you are looking to invest in cryptocurrency, you may want to consider our Emerging Technology Kit, which spreads risk across the industry rather than investing in a single coin or company. If you’re looking for something more stable, less speculative, and even less affected by current market volatility, check out the Large cap kit.
Q.ai eliminates investment assumptions. Our artificial intelligence scours the markets for the best investments for all kinds of risk tolerances and economic situations. You can activate Wallet Protection at all times to protect your gains and reduce your losses, regardless of the sector in which you invest.
The bottom line
Even though some cryptocurrency tokens have risen over the past few days, we cannot ignore that they are all significantly down from the all-time highs we saw during the 2021 crypto boom. only invest the money you can afford to lose if you plan to allocate your savings to digital assets.
Download Q.ai today to access AI-powered investment strategies.