It should be noted that there are indeed reasons for the markets to recover now. The fact is that on December 14 representatives of the Fed held another increase in the key interest rate. However, unlike the last four raises, this time the rate was raised by 50 basis points, not 75.

US Federal Reserve Chairman Jerome Powell

In theory this means that inflation may have passed its peak and then it will get better. Although it is important to realise here that a lower key rate hike does not mean an immediate economic recovery. However, a rate increase of 75 basis points for several months in a row is a rare event and people will feel the effects of such an increase in the future.

In a nutshell, a rate hike means more expensive loans for commercial banks from the central bank. This leads to less financing for various businesses, lower consumption, lower corporate earnings, staff cuts and a further decline in economic activity in general.

It should be noted that the cryptocurrency market reacted to the less aggressive key rate hike with a collapse. Still, on the day the rate decision was announced, Bitcoin was valued at more than $18,000, and now it is below $17,000.

Daily chart of Bitcoin exchange rate

When cryptocurrencies will start rising again

A popular cryptocurrency enthusiast under the nickname Cold Blooded Shiller compared the current market situation to the 2018/2019 bearish trend. As you can see from the chart below, after a short-term spike upwards, Bitcoin then began to roll rapidly downwards and then lost volatility altogether, meaning that the rate suddenly became very stable. This was followed by a period of low trading activity lasting about 18 months.

Comparison of Bitcoin’s decline cycles

According to CryptoPotato sources, a similar situation could happen again. That said, right now we just might be standing at the beginning of a long period of no volatility. If such a scenario does materialise, the “cryptozyma” could last until mid-2024.

It is important to note that any such comparisons with the past do not guarantee a certain future scenario. Therefore, any such forecasts should only be taken as a possible version of future market behavior.

But there is an absolutely opposite opinion. An investor under the nickname Kamikaz_ETH believes that Bitcoin’s price recovery will only take a few months. He urges not to compare the current trading situation with previous cycles, which developed before the formation of the sphere of decentralized finance. Here’s his rejoinder.

There won’t be a long “crypto-zima” for one or two years – a couple of months for growth is enough, depending on how long the global bottom is forming.

Note that this position is quite popular. Perhaps comparing the current state of the cryptocurrency industry with the events of 2018-2019 is really not worthwhile, as they are completely different niche states. Today, within the blockchain industry, there are a huge number of DeFi applications that allow for various coin transactions in all market conditions. Therefore, we can assume that, given the industry's greater capacity and popularity, there will be more people interested in buying crypto now. This means that in theory, it could take less time for the market to recover.

Cryptocurrency growth

Kamikaz_ETH called the past bullish cycle “the first wave of Bitcoin growth” amid the first real use of various cryptocurrencies. That is why what is happening now should not be compared to the past: many firms have already introduced or are about to introduce cryptocurrency-related services. And BTC, ETH and other popular coins are being bought even by companies whose shares are traded on exchanges. In investor’s opinion, this feature alone is enough to change the paradigm of new bullpen formation, i.e. the growth stages of coins.

Kamikaz_ETH’s assumptions may in theory come to fruition, but so far it is difficult to consider prospects for Bitcoin’s growth amid the dire macroeconomic situation. As the crisis has shown, most investors have not turned to BTC as a “last resort for capital” in difficult conditions, and the cryptocurrency’s price has continued to fall along the same lines as it did in 2018.

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The rise of Bitcoin and other cryptocurrencies

Regardless of future prospects, the duration of the market’s decline to date has been enough to bankrupt several popular crypto platforms. One of them was the firm Voyager. Its assets will now be taken over by Binance.US, the US arm of the industry’s largest cryptocurrency exchange. The asset purchase deal cost Binance.US $1.022 billion.

Binance.US has already been identified as the winning bidder, but the deal will not be formalised until Voyager’s bankruptcy court approves the request on 5 January. The platform has also named more than 100,000 creditors in its bankruptcy filing. With a purchase offer from Binance.US, they are one step closer to getting some of their money back.

Binance CEO Changpen Zhao

As a reminder, Voyager filed for bankruptcy in July after announcing its financial reliance on the previously bankrupt Three Arrows Capital (3AC) fund. Overall, the catalyst for the wave of bankruptcies was the collapse of crypto project Terra in May. On top of that, trading firm Alameda Research, founded by former FTX chief Sam Bankman-Fried, could be involved. It, like FTX, did not survive the bearish trend either.


We believe that the current state of the cryptocurrency industry really cannot be compared to the situation in 2018-2019. Accordingly, in theory, this could create the conditions for a faster market recovery, as the popularity of coins is also much higher now than before. However, it is important to understand that the high prevalence of digital assets has not saved the industry from a serious collapse. Therefore, it is possible that things will continue as before.