Coinbase predicts an extended crypto winter for Altcoins

In a market outlook report published on December 20, Coinbase Institutional indicated that the crypto winter will extend into 2023, especially for altcoins.

Business analysts expect the selection of digital assets to shift to “high-quality names” such as Bitcoin and Ethereum. This depends on several factors, such as the sustainability of the tokens, the maturity of the related ecosystems and the relative liquidity of the market.

They weren’t convinced that altcoins would gain much traction next year.

“We believe that investor appetite to accumulate altcoins was severely affected by the 2022 debt crash and could take several months to fully recover.”

No love for Altcoins

Bear markets are usually long, drawn-out positions that last at least 18 months if previous cycles are to pass. With this in mind, the cryptocurrency markets may continue to consolidate at current price levels until the second half of 2023.

Coinbase confirmed the idea, saying that the crisis of confidence will extend this decline “for at least several more months.”

It gave a low probability that crypto performance will decouple from traditional risk assets in the early months of 2023. Coinbase also blamed FTX for the ongoing liquidity crisis:

“Liquidity constraints may also disrupt normal market operations in the short term as many institutional entities expect assets to be seized in FTX bankruptcy proceedings.”

The recipients of the cryptocurrencies will be higher quality tokens and coins, according to the company, primarily Bitcoin and Ethereum.

For these two, the report notes that long-term BTC holders own 85% of the circulating supply, and Ethereum dominance as the industry standard for smart contracts continues.

The report also said that the transition to self-care and decentralized finance will continue in the wake of the collapse of FTX and Alameda Imbroglio.

More regulation and investor protection in 2023 is also likely to boost institutional investor confidence, which could eventually bring an end to the crypto winter.

Crypto Market Outlook

Digital asset markets are up around 2% on the day, pushing total market capitalization to $846 billion. Momentum is still skewed, albeit with smaller ups and downs within a range bound channel.

Bitcoin rose 1.7% to $16,867 at the time of writing, while Ethereum gained 2.2% to $1,200 again. The majority of altcoins are up slightly from yesterday’s levels at the time of writing, according to CoinGecko.

The Coinbase Predicts Extended Crypto Winter post for Altcoins appeared first on CryptoPotato.

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