Crypto Market Outlook: Looking Back to Forge New Milestones

This year, the digital currency ecosystem has been a focus for investors, journalists, regulators, critics, and evangelists alike.

Uncertainty in the global ecosystem has seen gains and significant losses as the cryptocurrency world has been shaken hard. The combination of macroeconomic and geopolitical headwinds that has affected major economies has proliferated into the crypto world.

The industry has been hit month after month, with 25 crypto exchanges shutting their doors. The implosion of FTX as the most high profile has caused questions to be asked and a level of trust broken as poster boy SBF's empire crumbled.

The collapse of FTX has pushed the combined crypto market cap below $804.2 billion.

The Market in October

Inflation has been constantly high, with many governments trying to solve this. Central Banks, including the United States Fed, continued their hawkish measures as US .

This led to stock markets and crypto coins selling off as investors shunned risky assets as interest rates increased. Additionally, the political turmoil in the United Kingdom following the resignation of Prime Minister Liz Truss and the installation of Rishi Sunak impacted the uptrend move the crypto ecosystem was trying to chart at the time.

Nonetheless, the combined crypto market cap reclaimed the $1 trillion milestone on October 26 and has stayed about that point since.

Positive Bitcoin (BTC) dynamics fueled the market cap growth. The premier digital currency has grown by 8.93% over the past month, as at the time of writing.

Most altcoins also performed well over the past month, with Ethereum (ETH) soaring 21.43% to $ 1,634.21, Solana (SOL) up 2.90% to $33.89, and Binance Coin (BNB) has by 7.95% to $351.21.

The crypto market entered November positively, leaving investors with increased optimism for a better month ahead (given the FTX situation, saying this looks stupid).

The optimism Around "Moonvember" did NOT materialize.

Expectations that November would again bring most major cryptocurrencies back to profitability points were dispelled as early as November 2, when Coindesk first published the report about the imbalances in FTX Exchange's balance sheet.

Days after, the FTX exchange, once valued at about $32 billion, declared bankruptcy after a massive run on user deposits. The FTX Token (FTT) tanked by over 90% following the news, and it weighed down on the price of Bitcoin and other altcoins across the board. Following November, BTC is down by over 22% in the month-to-date period, while ETH is down by a massive 28%.

The collapse of FTX has introduced more significant volatility into the ecosystem, and the breach of trust has pushed investors to place their backing of crypto firms on a wait-and-see level. The FTX bankruptcy has created another significant contagion that forced outfits like BlockFi and Liquid to suspend trading accordingly.

Either way, the recovery of Bitcoin and other assets will depend mainly on how industry leaders help retail and institutional investors minimize the pain that the FTX collapse might have caused.While these are subjective propositions, Binance CEO, Changpeng 'CZ' Zhao has advocated publishing Proof-of-Reserves, which Binance and other trading platforms have complied with.

"Many consumers are really hurt financially, they have money stuck on FTX, etc. That's going to really shake confidence and credibility in the industry," CZ last week. "We will have a lot more education to do. We do need to increase the transparency of our businesses — significantly. That itself is actually probably a good thing."

The BTC/USD 4h chart, as seen on TradingView, promptly summarized what the movement of the coin has been for some time, with evidence it has traded below the $17,000 resistance point since November 11. While a rebound is being partially signaled by the Relative Strength Index (RSI) and the Bollinger Bands, there is no telling how long the sellers will hold the market down at the current levels.

While the negative fundamentals are not entirely Bitcoin-centered, the digital currency is very sensitive and, thus, responds to all signs of distress in any part of the crypto industry. Altcoins follow Bitcoin, and there is a likelihood that individual decoupling will not be experienced before the end of the month unless we see dramatic growth in the price of the premier digital currency.

Downturn and Opportunity in the Same Net

Despite the contagion that is being expected across the board, there are some independent trading platforms unrelated to FTX. Bitrue, a Singapore-based digital currency exchange, has continued to show innovation, positive operational control, and regular audits to stay marketable.

Robert Quartly-Janeiro, Chief Strategy Officer of Bitrue, commented, "Safety and pragmatism are at the core of Bitrue's business, having learnt that the hard way we continue to invest in new ways of safeguarding our user's assets whilst we are working with auditors on transparency,"

Quartly-Janeiro added, "the Binance-FTX saga has to be a moment when the industry matures, becomes more professional and transparent; it's why Bitrue prioritizes the safety and security of investors' assets and is the first exchange to establish an insurance fund to safeguard user's assets. More broadly, though, it's clear that many exchanges have been operating beyond and in excess of their core businesses to take unnecessary risks to the detriment of investors. Fewer exchanges ultimately improve quality and volume, which is a good thing for investors."

The fact that some exchanges still maintain a trusted trading platform calls for a change in trading strategy for all investors, regardless of their capital and experience.

Is a New Crypto Winter Underway?

The market is largely unpredictable now. From how investors were optimistic about the industry entering into November to the FUD that has engulfed the market, it is evident that the industry is still mainly subject to the actions of a few whales.

The slump we have recorded over the past 24 hours has pushed Bitcoin to more than a 52-week low of $15,599.05. This has been seen by many as a return of the second phase of the crypto winter. And the sustained sell-off will undoubtedly make this fearsome projection come true.

In the meantime, investors should be careful and only hold funds in cold wallets or exchanges that have proven liquidity verified by its latest reserve publications.

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The lead image for this story was created with HackerNoon’s Stable Diffusion image generation feature using the prompt “a mountain with a bitcoin coin at its peak“.