In the current cycle, Bitcoin (BTC) and altcoin bear market situation continues. However, the community is wondering when the 2022 crypto winter season will end. Rayne Steinberg, CEO of digital asset investment company Arca, shares his views on the matter.
Is the winter of Bitcoin (BTC) and altcoins over?
The ongoing crypto winter is currently accompanied by a macroeconomic crash that has a direct correlation to Bitcoin (BTC). Meanwhile, few in the crypto community are waiting for the bear market environment to end. However, we’ll see if the bulls catch up before the end of December, which has traditionally been a good month for crypto.
A number of negative consequences have come from macro events in the last few months. Thanks to Bitcoin’s correlation with the S&P 500, the BTC price has taken losses on several occasions. As we continue to follow the Bitcoin stock markets, we will see when the crypto market emerges from the bear state. In September 2022, experts predicted that BTC would drop by around 20% if it continued to follow its correlation with the S&P 500.
“The end of winter is spring!”
In the current context, it is critical to predict how the market will perform as we enter 2023. Rayne Steinberg, CEO of digital asset investment firm Arca, feels the market is ‘closer to the end of the crash’. Steinberg expresses his optimism, saying the current situation has bottomed out. But he warns it’s hard to say when and when things will get better, given the current macroeconomic decline. In this context, Steinberg makes the following statement:
About a month and a half ago, we really started to see crypto market correlations separated by broader asset classes, even though cryptocurrencies like Bitcoin are largely driven by equities.
Huge BTC movement from institutional accounts
Recently, on-chain data shows that institutional investors are moving large amounts of BTC from Coinbase Pro. The data revealed that major players mined $48,000 worth of BTC worth about $940 million. Interestingly, much of it was long-term holding. According to the data, 32,000 BTC was held for about three to five years.
Also, BTC whales hold the lowest supply in nearly three years. According to Santiment, small and medium-sized addresses actually increased their Bitcoin holdings over the same period. Currently, Bitcoin addresses holding between 0.1 and 10 BTC make up an all-time high, with 15.9% of Bitcoin’s total available supply.
“Danger bells are ringing for Bitcoin!”
cryptocoin.com As you follow, the crypto market is struggling with various macroeconomic factors. However, Bitcoin remains stagnant. The correction after the crypto rally wiped out all BTC gains. It’s barely holding up a 0.27% increase in the last 7 days. According to Charles Schwab, anxiety for Bitcoin investors may be just beginning due to the recession.
Jeffrey Kleintop, Chief Global Investment Strategist at Charles Schwab, reveals that one of the leading indicators of the global economy is falling to dangerous levels. The OECD underlines that the overall leading indicators have fallen into the danger zone. Kleintop notes that every time this index falls below 99, the global economy is facing a recession.
He also explains that this indicator most recently fell below 99 in 2020, when the global economy was facing recession due to the pandemic. Similarly, it fell below 99 in early 2008, early 2001, late 1990, late 1981, mid-1974, and mid-1970. It currently stands below the 99 mark.
Is the US economy going into recession?
The composite leading indicator highlights a potentially large shift in the economic outlook. It also reveals any dangerous anomalies in global business operations. OECD data underscores that the consumer confidence index has dropped even worse than the 2020 pandemic and the 2008 subprime mortgage crisis.
The recently released Empire State Manufacturing Index also reveals an alarming decline in the manufacturing outlook in New York. The World Bank has already underlined that the global economy will face a major recession in 2023. The slowdown in demand is the result of central banks’ hawkish policy guidance. The Federal Reserve also noted that the cost of doing too little to rein in inflation is higher than the cost of doing too much.
How will BTC price perform in recession?
Bitcoin was invented after the last great recession in 2009. As such, there is no conclusive evidence on how the leading cryptocurrency will perform. If the Fed turns around to overcome the demand slowdown, BTC is likely to skyrocket due to quantitative easing.
However, the stock market typically does not perform well during a recession. Bitcoin has a strong correlation with the stock market. Therefore, it is also likely to suffer heavy losses due to the recession.
