After a tough and challenging period of stagnation and stagnation, the cryptocurrency market is finally seeing upward momentum amid easing global macroeconomic headwinds and slowing inflation. The global market capitalization of cryptocurrencies has exceeded $1 trillion, which contributes to a high and stable trading volume.
Bitcoin and Ethereum showed impressive stability, and both managed to trade in a positive range for a month. Experts expect the rally to continue in the coming weeks due to the lack of signs of weakness in the macroeconomic situation. Major market conditions around the world, mainly in the United States and the United Kingdom.
Let's take a look at the main factors driving the cryptocurrency market and what investors should be looking for in this unpredictable cryptocurrency.
Cryptocurrency markets are on the way to recovery
In general, the broader cryptocurrency market has been gaining momentum this year, with major currencies leading the way. Bitcoin, the world's largest cryptocurrency, rose sharply and was trading around $23,500 in positive terms. From a 2022 low of $15,523 on November 9, BTC surged nearly 40% in January 2023 to a 30-day high of $23,954 on January 29, 2023.
Similarly, Ethereum is also showing significant strength and is up nearly 5% over the past week and is currently trading at $1,644.
The altcoin market has also performed very well over the past few weeks and has shown a lot of strength. Both ADA and SOL have increased by more than 20% since the start of 2023. However, other altcoins like AVAX (82%), FTM (143%) and especially APT (382%) did great in January compared to last year. The cryptocurrency market as a whole is trading in the “green” range, which makes cryptocurrency investors happier.
After the FTX crash in November 2022, all major cryptocurrencies experienced massive corrections at the end of last year. The cryptocurrency market ended in 2022 unexpectedly, but it is now very clear that the bulls will return in 2023.
How did the cryptocurrency market rise?
The cryptocurrency market has seen some positive signs of weak macroeconomic activity, which has led to an increase in cryptocurrency prices. In addition, the total trading volume in the cryptocurrency market has returned to levels not seen since June 2021.
The rally in the cryptocurrency market was widely seen when the US Federal Reserve decided to cut interest rates by 25 basis points instead of raising them by 75 basis points. Amid slowing inflation, strong employment data and a rebound in GDP numbers. The Fed was expected to take a tough line and raise interest rates by 75 basis points. Thus, a 25 basis point increase in the current interest rate was welcomed by cryptocurrency market participants, which means that the Federal Reserve may be the winner in the fight against inflation.
Moreover, the decision to increase the exchange rate also directly affected and weakened the US dollar to a great extent, as a weaker dollar always leads to an increase in the price of cryptocurrencies.
Not only the US market, some macro factors also indicate slight signs of recovery in China and other major global economies. In addition to these factors, nearly three years after the Covid-19 lockdown, the opening of China’s borders and efforts by other central banks to combat inflation have boosted sentiment in the cryptocurrency market.
The past five to six months have been nothing less than a roller coaster ride for the cryptocurrency market. Due to widespread global uncertainty and the decline of FTX, the situation in the markets has worsened. Here's a look at last year's market capitalization numbers from November 2022 to February 2023:
Cryptocurrency market capitalization
What should Indian investors do about cryptocurrency?
The emergence of cryptocurrencies could allow not only retail investors, but also high net worth individuals, institutional investors, and corporations to recoup some of their wild short-term trading profits.
When the cryptocurrency market is booming, it is important to follow simple rules and strategies for smart investing, such as:
- Diversify your portfolio and invest in different types of investments.
- Spread your risk to minimize the impact of a possible decline in a particular cryptocurrency.
- You do the research (DYOR) and follow the evolution of the industry.
- Don't make rash decisions or get caught up in the noise.
- Follow a disciplined investment style.
- Finally, security should be a top priority for investors, so store your crypto assets in a secure wallet with proper security measures and safeguards.
Experts note that cryptocurrency investors should be careful, as any new development in this area can lead to extreme situations.
According to the research team at CoinDCX, one of the largest cryptocurrency exchanges in India, “This time the story is different because it is more macro-oriented, projects focus on development and this momentum can be seen as a medium rally of a bear market, so investors in such a story should Small tokens Reducing entry and investment mainly healthy day to day development projects.
Raj Karkara, COO of Zebpay, advocates a learning-oriented approach because it is important to monitor the cryptocurrency market regularly and keep up with news and technical analysis.
“Investors should fully understand the basics of cryptocurrency before investing. There are many investment strategies that can be used to help you invest wisely during the rally,” Karkara said.
Taxnodes CEO and founder Avinash Shekhar advises Indian investors to take the time to understand the basics of the crypto space rather than hearsay or rumors.
“Investors should start small and gradually increase their holdings by making informed investment decisions without relying on guesswork. Cryptocurrencies as an asset class are currently volatile. However, through innovation and regulation, the true potential of the Web3 space will begin to unfold and cryptocurrencies will begin to unfold,” Shekhar said.
The cryptocurrency markets are certainly recovering from the recent crash, but there is still a sense of "fear" in the cryptocurrency community. Experts say feelings towards India's cryptocurrency industry remain mixed as they had high hopes for some cuts in tax rates from the government, but Union Budget 2023 announced on February 1, 2023 made no new mention of tax breaks. . section.
Uncertainties remain regarding India's elevated regulatory and tax environment, but volumes in Indian equity markets are expected to rebound from the bottom as global macroeconomic conditions improve. Investors are advised to trade with caution and vigilance as no one knows if the cryptocurrency rally will continue.