2022 has indeed been a tumultuous year for cryptocurrencies, followed by a series of unfortunate events. But the market started showing signs of growth by the beginning of 2023, with crypto prices rising again from their slumps.
However, volatility is a given factor in the crypto investment sphere, and with the broader market rally, some high-cap cryptocurrencies are trading lower compared to the previous month. The Bitcoin and Ethereum price forecasts expose that the two top cryptos are showing minor signs of weakness, leaving investors in fear and confusion.
Why Is Bitcoin Down?
Investors are well aware of the largest and oldest cryptocurrency Bitcoin, and its highly volatile boom and bust. The blue-chip cryptocurrency was slowly recovering from its 2022 lows when it again experienced a sharp comedown fueled mainly by regulatory concerns. As per reports, Bitcoin is trading under huge pressure. The crypto is trading at $22,421.58, significantly down from its previous all-time high of $68,789.63.
Over the past few weeks, Bitcoin has been under immense selling pressure, down by almost 4% on the weekly charts. As per reports, Bitcoin is down in price and has a market cap of $432,984,564,470. The current macro indicators, like rising inflation, are adversely affecting BTC’s rally, weighing it down. Analysts also expect the Federal Reserve to proceed with its plans of increasing interest rates, which could lead to the possibility of an economic recession in the US. In addition to this, the total number of Bitcoin whale addresses has also continued to drop.
Investors must note that if such a scenario comes up, high-risk assets like Bitcoin will be the most impacted. Although BTC attempted a quick spike in price along with the overall crypto market at the beginning of 2023, it was unable to pass the $25,000 stiff resistance level. Several experts have opined about the crypto showing signs of weakness. Mike Mcglone, the senior commodity strategist at Bloomberg, writes:
“Don’t fight the #Fed” was the dominant headwind for markets in 2022 and remains so in 1Q. Bitcoin $25,000 resistance may prove significant for all risk assets.”
He further explains that the volatilities will be even stronger in the coming days, and the trajectory will remain downwards.
“The amount of existing whale #Bitcoin addresses is continuing to sink, with 2,011 existing compared to 2,266 that existed one year ago today. 2,489 was the #AllTimeHigh set on February 8th, where prices jumped +70% in the following 10 weeks”
Ethereum Also Shows Signs Of Weakness
It’s not merely the world’s first cryptocurrency that’s showing signs of weakness, but Ethereum, the second-largest crypto is also moving in a relatively downward trajectory with BTC. ETH also has faced immense selling pressure recently and is trading at $1,561.89 levels, boasting a market cap of $191,131,472,880. High selling pressure generally occurs when investors have the potential to earn high profits.
On-chain data provider CryptoQuant has a contrarian view of ETH’s plunge down,
“We believe there will be little selling pressure for ETH when staking withdrawals become available after the Shanghai upgrade. This is based on our analysis of the profit and loss of staked ETH. Two factors support the argument: 60% of staked ETH is at a loss, and the largest staking pool’s depositors are also at a loss.”
Now looking from a technical perspective, the chart shows that ETH is showing signs of a 25% correction from the current levels. Since the crypto has been trying hard to break its resistance levels in the past, each of the failed breakouts resulted in a strong pullback. However, the volatility of the crypto sphere cannot be ignored. If the bulls take lead in the coming days, any strong breakout above $1,650-1,700 will lead to a price rally to $2,000.
Although Ethereum completed its monumental ETH2.0 update in 2022, it didn’t impact the price of ETH at a level as expected. Now investors are curiously waiting for the Shanghai upgrade in 2023. But there are speculations that as the Shanghai upgrade comes closer, there could be a sell-off in the future due to increasing liquidity.
Will BTC And ETH Rise Again?
Bitcoin and Ethereum are the most promising cryptocurrencies with the potential to lead the next bull run in 2023. Despite the negative sentiment surrounding it, BTC is one of the most preferred cryptocurrencies for investors, institutions, and even governmental authorities. It is touted as digital gold, proving its value as a hedge against inflation. Bitcoin is known for its massive up-and-down cycle, and crypto enthusiasts are positive about its future, given the scheduled Bitcoin halving event in 2024. This is generally viewed as positive for BTC’s price, as it reduces supply and increases the demand for the token.
Additionally, investors are also curiously positive about ETH’s bullish rally in the coming months, as the crypto has a slew of updates and developments in the pipeline. The Merge has made Ethereum one of the best sustainable blockchain networks in the market. Now Shanghai would unlock the staked ETH for withdrawal by investors. Ethereum has been gaining massive attention from institutional and retail investors recently, and the number of validators on the Ethereum network has increased.
If you have been in the crypto investment sphere for some time now, you would know that uncertainty over the looming fear of inflation and the trajectory of interest rate hikes will continue to create volatility in the crypto market. Although BTC and ETH are showing signs of weakness, considering the general market, this could change overnight.