Why Is The Crypto Market Down In December 2023?

The year 2023 started on a positive note for most cryptocurrencies. Last year after bearing the brunt, most of the crypto tokens took the path of recovery. However, the crypto prices are still low as compared to their all-time highs.

The price of cryptocurrencies has been through a rollercoaster ride in the first half of the year. Will the other half be a slow growth or will the cryptocurrencies reach new heights and recover completely from the loss faced in last year?

How is the Crypto Market Performing?

The crypto market is swinging from left to right, comfortable in limited range and smooth curves. The FTX fallout in the year 2022 shook the market and turned it downside. This year gave a fresh and positive perspective to major cryptocurrencies like Ethereum and Bitcoin, which gradually turned green helped by the relaxed macroeconomic situation of macroeconomic and cooling inflation.

Nevertheless, the market sentiments have slowly turned from fear to greed and then to neutral. This is the nature of the crypto market which is highly volatile and unpredictable. The cryptocurrencies were showing a sign of stability last month but due to the U.S. inflation and its impact on liquidity.

The U.S. Federal Reserve’s stance on interest rate hikes has moved the crypto market upside down. Bitcoin crossed the level of $31,000 in July 2023 and is again at a low in August 2023 at $27,000 but has shown immense recovery in October at the level of $34,495. This has left the crypto investors confused and nervous.

The current volume in the digital crypto market stands at $41.21 billion. However, if we talk about the world’s largest cryptocurrencies, Bitcoin and Ethereum were at the top of the charts till last month and showing signs of recovery. As of October 31, 2023, Bitcoin is trading at $34,497 and Ethereum is trading at $1,808.

Crypto experts believe that the current situation is tough and the recovery is long ahead. Most of the crypto are way behind their all-time highs. If we take Bitcoin it is still 50% down from its all-time high which was in November 2021 at $60,000 and Ethereum is currently at $1,800, an all-time high at $4,000 in the year 2021.

The crypto market till now has no doubt positively responded to the global finance uncertainty and is still standing strong amid tightening credit situations with shaky bond market volatility. Crypto cannot sail alone, for a balanced atmosphere all other financial assets have to follow the same sentiments.

Is Investing in Cryptocurrency Safe?

The cryptocurrency market has seen the good side as well as the worst side of the market, be it post-Russia-Ukraine effects, Terra-Luna crash, FTX collapse or tightened tax regulation, it has witnessed roughest storms during the past few years.

The year 2023 gave a fresh start to the crypto world, showing positive signs of recovery. Crypto investors believe that in situations like this, investing in stable digital currencies like Bitcoin and Ethereum in SIP format is a safe choice. Crypto experts consider that in the overall portfolio, investors should just look at investing just the 5% exposure to cryptocurrencies. The most important part is to invest only a miniscule amount and not all your life savings as the market is highly volatile and there are chances of you losing it all.