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Huobi Global, a major cryptocurrency exchange, 2022-2023 Annual Reportpredicts that the current bear market may end soon as the cryptocurrency market expects to bottom out in early 2023.
On January 1, 2022, the market capitalization of the global cryptocurrency market was approximately $2.2 trillion. However, an overheating bear market has pushed its value to nearly $2 trillion, dropping him to $847.6 billion, his lowest at the time of writing.
The 2022 bear market was exacerbated by macroeconomic distortions caused by rate hikes and rapid inflation. Additionally, the collapses of Terra-Luna, Three Arrows Capital, and FTX have led to widespread contagion that has forced many cryptocurrency companies into bankruptcy and cost investors significant losses.
According to Huobi’s report, the decentralized finance (DeFi) ecosystem has been hit even harder as total value locked (TVL) across chains has decreased by more than 70%.according to DefiLlama data, DeFi protocol TVL fell from $171 billion in January to around $55 billion at the end of October.
The non-fungible token (NFT) bubble appeared to burst as the number of active users fell by 88.9% and total market cap fell by 42% from $35 billion to $21 billion.
Layer 2 scaling solutions have grown more than the rest of the ecosystem in the past year. As a result, total value locked in Layer 2 protocols peaked at $7.5 billion and bottomed out at $3.7 billion. However, since the crash in July, he has slowly soared to $5.32 billion.
The crypto market has evolved significantly over the past year, with new areas such as GameFi, NFTfi, and Metaverse gaining mainstream attention. For example, the GameFi industry reportedly raised around $2.9 billion during this period.
The long-awaited Ethereum merger was completed on September 15th, ushering in a new era of staking-as-a-service for the industry. As of October 2022, approximately 15 million ETH has been staked on his PoS chain, representing his 12.56% of total ETH supply.
In closing out the market performance segment of the report, Huobi said the cryptocurrency market could bottom out by the end of March 2023, given the 200-week SMA indicator, Fed rate hikes, and deleveraging of riskier financial institutions. I expected it to be high.
Considering Bitcoin’s price action, $16,945 is currently below the 200-week SMA indicator. If we line up the 2022 price cycle with the 2014, 2015, 2019 and 2020 cycles, we observe a trend pattern. Based on historical data, Huobi predicts that Bitcoin will rebound soon and other cryptocurrencies will emerge from the current bear market.
On the macroeconomic side, after four consecutive rate hikes of 75bp, the US Federal Reserve is expected to cut interest rates from December 2022, which could lead to a sharp drop in inflation around March 2023. . You can also find its bottom.
The recent FTX crash wiped out many overleveraged financial institutions. The overall impact of the collapse is expected to last through the first quarter of 2023.
If Huobi’s parameters work as predicted, the cryptocurrency market is expected to bottom out when BTC and ETH prices trade at $1,500 and $1,000 respectively.
