Crypto 2023: Crypto winter doesn’t seem to be ending anytime soon for investors

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Bombay

As FUD sweeps through the crypto market heading into 2023, it has been a testing time for crypto evangelists such as 21-year-old Gurugram-based crypto investor Chahal Verma, who is glad that 2022 has passed.

FUD is crypto slang for fear, uncertainty, and doubt, which has rocked the crypto market for most of the last year.

2022 was probably one of the most volatile years for many new investors. Personally, this was my first real bear market. We have seen many established projects like Luna, Vauld, Celsius, Voyager, FTX crash. The list seems endless,” she said.

Most Indian crypto investors like Verma wavered between hope and despair in a turbulent year as they faced multiple bankruptcies, meltdowns, and ongoing market volatility.

After a breakout year in 2021 when record numbers of Indians jumped on the crypto bandwagon, 2022 saw most of their wallets slide into the red as cryptocurrencies crashed to their lowest level in two years.

As prices plummeted, the government announced in February a 30% tax on all profits from cryptocurrency trading, as well as a 1% tax on every transaction. In one fell swoop, this move stifled the Indian crypto ecosystem comprising of investors, traders as well as exchanges.

The market mood shifted from a confident WAGMI (we’re all going to get there) to a pessimistic NGMI (not going to get there).

Mirroring the crypto winter of 2018, 2022 has seen the value of major cryptocurrencies drop sharply.

Bitcoin, the world’s most dominant cryptocurrency, has returned all of its accumulated gains since September.

As of 5 p.m. on December 31, Bitcoin had fallen 64.2% to $16,574, compared to the prior year period. Ethereum fell 67.4% to $1,198.4, Binance Coin 52% to $246.14, Ripple 58.6% to $0.3439, and Solana fell around 94% to $9.890.

Meme, Shiba Inu and Doge coins are down around 76% to $0.00000812 and 59% to $0.07022, respectively, from their 2021 highs.

Overall, the global crypto market has grown from $2.2 trillion at the start of 2022 to $796 million.

The failure of Terra Ecosystem, Three Arrows Capital, FTX, Celsius Network and Voyager Digital has severely shaken the confidence level of global and Indian investors last year.

2022 has been a hectic year. This made me question my thesis several times. Lucky are those who cashed in crypto and walked away; those who jumped again to buy the dip (like me), burned their wallets and the scars they left will have us navigating the markets with caution for 2023 and beyond, said Ashwini Nadar, a software engineer based in Mumbai.

Khaleelulla Baig, co-founder and CEO of Koinbasket, said crypto investors in India and elsewhere have seen a decade of action in just one year.

We’ve seen hope and dismay swing like a pendulum on important issues like regulation, adoption, trust, legitimacy, scams, and the rise and fall of crypto heroes and villains. In short, the Web 3 ecosystem is going through the stress test of its life,” he said.

Trading volume on major Indian cryptocurrency exchanges has fallen by more than 80%.

According to a report by CryptoCompare, average daily volumes worldwide fell 74.1% to $203 million in 2022, from $781 million in 2021. Average monthly assets under management also fell 39.5% to $31.9 billion from $52.8 billion in 2021.

Several Indian investors have been driven by stories of people generating extraordinary returns within days or months, the high-decibel advertising blitzkrieg kicked off by funded crypto exchanges, as well as the fear of missing out (FOMO) factor.

Now they’re stuck with bleeding wallets because the crypto winter doesn’t seem to be ending anytime soon.

The dilemma they face is whether to cut losses or wait out the bear market.

I entered the market for quick gains, but now with significant losses I was forced to become a long-term investor, said Gopala Somani, a Delhi-based clothing trader.

Some investors, however, remain confident in the long-term history of cryptocurrencies.

Investors who have focused on Bitcoin and the very few other projects that have been built during this time will certainly enjoy the fruits of their patience in the next bull run, Verma said. Everyone in crypto has finally realized the importance of self-custody after watching many top exchanges crash.

By the end of 2021, many experts had predicted that Bitcoin would hit $100,000 by December 2022. These days, however, experts are predicting that it will fall to $10,000 or lower in 2023.

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