November 2023 – Forbes Advisor INDIA

After a strong start to the year 2023, the cryptocurrency market is now witnessing a slight downside due to the global macroeconomic situations and inflation data. The world crypto market capitalization is trading at $1.27 trillion as of Oct. 31, 2023, a bit under pressure, due to the impact on the trading volumes. 

The leading coins of the crypto market – Bitcoin and Ethereum – showed incredible stability at the start of the year and have been trading in green with a marginal rise. Let’s have a look at the important reasons that have turned the cryptocurrency market hopeful in 2023 and what approach investors should have in this unanticipated crypto rally. 

Crypto Markets On A Road to Recovery

Overall, the crypto market has shifted from “fear” to “neutral” and now it is “greed”. The world’s largest cryptocurrency, Bitcoin, is now hovering around the levels of $34,372 as of October 31, 2023, after touching the $31,000 mark on July 04, 2023.  

On the other hand, Ethereum has also shown signs of recovery, corrected a bit and was above the $1,850 level. Ethereum which marked its highest peak since August 2022 after touching the $2,100 level in mid-April 2023. This rally was seen immediately after the successful launch of the ETH hard fork “Shapella”, which can transform the landscape of the crypto coin Ethereum and its applications. Currently, ETH is trading at 17.0% and forming a strong resistance at $1,799 levels.

The cryptocurrency market gets usually volatile when it comes to announcements from the US Fed, as crypto experts closely keep an eye on such major developments which can directly impact market liquidity factors and as increasing interest rates can possibly sting equities, commodities and also cryptocurrencies. 

Earlier this month, the market witnessed massive support due to several optimistic factors such as inflation-tackling methods and the weakening dollar index in the U.S., which boosted the overall sentiments. 

However, if we observe the broader level, then the entire cryptocurrency market including BTC and ETH are showing very little signs of recovery. Moreover, ceiling and interest rate hikes in the U.S., and the inflation data had put the crypto traders in a daunting position. But now crypto markets as a whole, leading the path to resistance before the high jump. 

Performance of the Most Popular Cryptocurrencies

(As of October 31, 2023)

Crypto experts believe that BTC has witnessed quite a recovery over the past few days. This correction in BTC shows the overall state of the crypto sector. Now, any move be it a breakout from the downtrend channel and clear trend reversal, might help to correct the prices of the Bitcoin further. 

What Lies Ahead For the Crypto Market? 

The crypto market has been under a lot of pressure due to the extensive concerns over the SEC allegations and charges on the crypto exchange Binance and also the global inflation scenario. However, cooling inflation data and several other world factors have balanced the downside momentum of Bitcoin and other crypto coins such as Dogecoin, BNB, Solana and many more. 

The Federal Reserve in the U.S. kept the rates steady in its June Federal Open Market Committee (FOMC) meeting, pausing the 15-month rate hike cycle has highly pushed the dollar and increased the market volatility in the country’s treasury, which can lead to more traders participating in risk-taking assets such as cryptocurrencies. The FOMC also agreed to halt its rate hikes in June to assess the impact of its growth and combative tightening campaign on inflation. 

At present, the global crypto market capitalization is firmly standing at $1.27 trillion. Last time, the crypto market recorded smaller positive signs due to relief in macroeconomic activities which has led the cryptocurrency price to rally. The main reason was due to the Federal Reserve’s approach towards a hike in interest rates, rising trust towards decentralized finance after the banking fiasco in the U.S. or to avoid recession, or the cryptocurrency market got huge support from such factors and raised positive outlook for the rest of the year.  

Also, there are high hopes on the monetary policy returns which might include BTC and other digital assets, and the minds can be changed of those regulators who have otherwise appeared hell-bent on suppressing virtual assets.

Adding to this, there is also a primary reason for this recent crypto mini-bull rally. Bank contagion has resulted in massive losses on various bong holdings, which has forced the Federal Reserve to go easy on rate hikes to combat severe liquidity issues. The current interest rate in the U.S. at the time of writing is at 5.5%. 

Higher inflation rates have always weighed on risky assets such as cryptocurrencies, as demand for them dampens when rates rise. 

The past year 2022 has been cruel for cryptocurrencies. The massive global uncertainties and FTX fallout led to the markets being hit worse than ever before. 

Let’s have a look at the values of market capitalization over the last year, from November 2021 to August 2023: 

Crypto Market Capitalization

How to Invest in Crypto?

The most important thing you should remember before investing in a cryptocurrency is that the crypto market is highly volatile and investing can not always turn out as planned. Currently, the market is still recovering and investing now might not be a good idea, even the crypto experts are confused with the dynamics of the current crypto market. It would be a wise choice to invest all your life savings into cryptocurrency and do your research and analysis before investing. 

Let us see how you can invest in crypto through the steps:

Step 1: Understand and do your research on the crypto market

Step 2: Choose the amount you’re willing to invest

Step 3: Choose the cryptocurrency you want to invest in

Step 4: Choose a crypto exchange platform for your investment. Refer to our article on the best crypto exchanges and apps in India 

Step 5: Make your own account through the exchange platform

Step 6: Complete the verification and KYC process

Step 7: Fund your crypto account and you’re good to purchase your desired crypto coin

Step 5: Choose a crypto wallet to store your cryptocurrency. There are multiple digital wallets like mobile wallets, hardware wallets, desktop wallets and online wallets. Learn more about the best crypto wallets in India

Step 6: Secure your wallet

Step 7: Hold and then sell to gain profit