Regulatory crackdowns, banking collapse and persistent inflation should have created problems for the crypto industry, but prices are only rising in 2023.
Bitcoin, the largest cryptocurrency by market capitalization, is up 72%, recently breaking the $30,000 threshold. (It has since fallen below $28,500 as inflation and rising interest rates spooked investors).
Ether, the second-largest, rose 62% to cross the $2,000 mark following the successful upgrade of the Shapella blockchain. Despite the fact that the total market value of all cryptocurrencies has reached approximately $1.2 trillion. This is an increase of as much as 50% since the beginning of 2023!
Yes, we understand that today’s numbers on the charts still pale in comparison to the heights we saw in 2021, but still.
“Cryptocurrencies operate like clockwork on four-year cycles,” said Matt Hougan, chief investment officer at crypto firm Bitwise Asset Management. This theory says that token prices rise for 3 years, and in the 4th they begin to decline.
History supports this theory. Here's a short tour for you. From 2011 to 2013, the price of the crypt rose, and then fell in 2014 after the collapse of one of the very first Bitcoin exchanges, Mt. Gox. It went bankrupt after hackers stole hundreds of millions of client funds.
Cryptocurrency prices rose again from 2015 to 2017, but fell sharply in 2018 when the era of ICOs, or initial coin offerings, left many investors cash-strapped. A lot of scam + just poorly organized projects.
From 2019 to 2021 prices rose again, and in 2022 they fell, we remember this series of collapses of cryptocurrency companies.
However, the four-year cycle hypothesis uses a sample of three price rises and falls, which is a fairly small data set. Therefore, yes, it sounds nice, but in reality it does not work, because the larger the sample, the more accurate the results.
Another theory is that the bullish occurs during the cue ball halving, which is when the mining process becomes twice as difficult. This happens once every few years. This is done to scale the network and improve its security over time. Satoshi is quite prudent :D.
Well, whatever it is, in any case, “Over the past 14 years, this industry has died several hundred times,” said the optimistic Chhugani, an analyst at AB Bernstein.