The 2022 crypto bear market is arguably the worst in the history of the crypto and blockchain sector. As prices of popular coins plummeted, many crypto companies failed one after the other—Terra, Celsius, Voyager and FTX are just a few of the casualties of the 2022 crypto winter. The bearish trend has prompted several questions, including “is Bitcoin dead?”.
Though there are sound reasons to suspect that the crypto market will take a while to recover, it is wrong to conclude that Bitcoin is dead. The original cryptocurrency might be experiencing one of its toughest market trends in the last 10 years, but the story is far from being over.
2022 has been a bad year, but what most people consider the Bitcoin crash is somewhat exaggerated.
Why is Bitcoin down?
It is no surprise that volatility and unpredictability have become synonymous with Bitcoin and other crypto assets.
Macroeconomic reasons for Bitcoin’s crash
The crypto bear market of 2022 was exacerbated by the uncertain macroeconomic conditions, including rising inflation, which prompted central banks to raise interest rates. There is of course also the war in Ukraine, which has negatively impacted geopolitical stability and also disrupted the markets for important commodities such as grain, oil and natural gas.
In such an environment, it’s not surprising that investors have pulled out money from high-risk assets like Bitcoin. Of course, this is to be expected, considering the nature and volatility of the crypto sector. However, Bitcoin has shown its resilience time and time again and there’s a good chance it will recover in the future.
Generally, global financial markets experience price fluctuations habitually. There are several factors that contribute to this. In recent times, the following issues have contributed significantly to price fluctuations in different financial markets:
- The Covid-19 pandemic
- The war in Ukraine
- Higher interest rates and inflation
All these factors have also affected the crypto market, leading to a downward spiral of cryptocurrencies like Bitcoin, Ethereum and others.
Crypto-specific factors for Bitcoin’s crash
Bitcoin fell below $20,000 for the first time since 2020 in June 2022. This was partly caused by Celsius Network’s decision to suspend withdrawals and transfers, claiming “extreme” conditions. Celsius Network was a significant cryptocurrency lending firm.
As hinted earlier, a good number of other crypto companies found themselves in insolvency in recent times. FTX, which was one of the biggest cryptocurrency exchanges in the world, collapsed in November 2022, leading to another round of crypto market downturn. Like other digital assets, Bitcoin was also affected by the FTX collapse and the ensuing fears of contagion in the crypto industry that would force large players to sell their coins.
Prior to the FTX collapse, the Bitcoin price had been stable for a while, especially in October 2022. Prices didn’t frequently go below $19,000, but they generally stayed low at that level in that period.
Furthermore, Bitcoin and other major cryptocurrencies have experienced abrupt and significant sell-offs. As consumer confidence lowered, panic set in, and increased sell-offs were recorded across different platforms.
Bitcoin’s historical market performance: Is BTC dead?
Unlike conventional investments like stocks, Bitcoin has no underlying asset or what investors like Warren Buffet would call intrinsic value. The implication is that the price changes of Bitcoin are mostly driven by speculative investments and predictions regarding whether the price will increase or decrease in the future. It is a highly speculative market, which partly explains why Bitcoin’s price may fluctuate dramatically, even within a single day.
Historically, Bitcoin has had its highs and lows, which can be attributed to various factors, including the ones we’ve discussed so far.
Here are some significant events that have negatively affected Bitcoin’s price in recent history:
November 2022 – The FTX exchange was found to be insolvent after it became unable to honor customers’ withdrawal requests. After a potential takeover deal with Binance fell through, FTX filed for bankruptcy
June 2022 – Citing “extreme” circumstances, Celsius Network, a significant crypto lending firm, halted withdrawals and transfers
May 2022 – The Terra ecosystem, consisting of the LUNA token and the UST stablecoin, underwent a catastrophic collapse triggered by the system’s unsustainable economics
May 2021 – Elon Musk, the CEO of Tesla, announced that the electric automaker would stop taking digital payments due to worries about the environmental effects of cryptocurrency “mining”, or the use of computational power to create cryptocurrencies like Bitcoin
Here is how Bitcoin has performed this year so far in comparison to other top cryptocurrencies:
Price* YTD % Change Relative to BTC
Bitcoin $16,837 -65% /
Dogecoin $0.104 -39.7% +63.7
BNB $299.50 -42.7% +52.2
XRP $0.399 -52.7% +23.3
Ethereum $1,263 -66.7% -2.5%
Solana $13.58 -92.27% -70.4
*Price data collected on November 30, 2022 at 13:00 UTC.
Does Bitcoin have a future?
Given the past track record of Bitcoin over time and its historical price trends, it is probable that Bitcoin still has a bright future ahead of itself. In terms of the Bitcoin price, the 2022 BTC crash is far from unprecedented. Bitcoin has seen pullbacks of 80% or more before, and managed to recover.
What will the Bitcoin price be at the end of 2022?
A primary factor in Bitcoin’s favor is that it’s considered as the fundamental asset of the cryptocurrency market, which makes it attractive for sophisticated investors that want to get exposure to crypto but don’t want to buy riskier altcoins. Several well-known companies now hold BTC on their balance sheet.
A significant number of influential individuals also hold BTC. The Winklevoss Twins, Michael Saylor, Elon Musk, and Changpeng Zhao, the creator of Binance, are a few examples. It is also believed that many wealthy and influential people have bought Bitcoin anonymously.
According to our Bitcoin price prediction, the coin price may drop initially to around $15,000 per token. However, there is a good chance that it will rise again and reach a maximum of $20,000 per coin by the end of 2022.
What’s the Bitcoin price prediction for 2023?
Even though the year 2022 has been a particularly prolonged bear market, it is important to understand that bear markets, like bull markets, eventually end. According to our algorithmic-based Bitcoin price prediction for 2023, the biggest crypto asset might see a recovery in 2023.
According to our BTC price prediction, we may see BTC reach $22,000 within the first few months of 2023. Before the end of 2023, BTC could recover towards the $30,000 price level.
So, is Bitcoin dead?
The volatility and unpredictable nature of Bitcoin, coupled with the recent prolonged bear market in the crypto space, has unsurprisingly led many crypto investors to ask themselves if Bitcoin is dead in 2022. However, there’s a good chance that Bitcoin is far from done, and its past market trends inspire confidence.
BTC is certainly not dead, but it is experiencing a major drawdown, just like other digital assets. The Bitcoin price crash was also influenced by macroeconomic factors outside of crypto, which we can expect to improve when the market cycle reaches its bullish phase again.
