2022 has been quite a challenging year for cryptocurrencies, with prices dropping significantly compared to the previous years. Throughout 2020 and 2021, digital assets have enjoyed their moments in the sun, so what happened in 2022 came as quite a shock for most investors. Many lost a significant amount of their holdings and were left reeling in the aftermath. For some, the only acceptable solution was to sell what remained of their portfolios in a bid to not lose all of their capital. Others convinced that crypto has the potential to act as a hedge against inflation have kept their digital money and waited to see the prices return to what they once were.
They didn’t have to wait long since the first month of 2023 came with instantly elevated prices. Exchanges noted a marked increase in the Ethereum price, and other notable cryptocurrencies saw similar value increases. However, there have been some bumps in the road along the way. Just as last year, several exchanges collapsed, a bank well-known for its positive attitude towards digital assets had to put up the shutters for good. Regardless, many are convinced that the prices will return to their previous values sooner rather than later.
Going Green
One of the best indicators that cryptocurrencies are doing better is that there are concrete plans for further development of blockchains and systems. One of them is the intention to make mining a greener, more environmentally-friendly process. For quite some time, cryptocurrencies have gained a reputation as unsustainable assets owing to the fact that large amounts of energy are used during the mining process. Researchers estimate that the industry consumes the same amount of energy as a nation the size of The Netherlands.
As a result, miners have been developing new ways of approaching the process so that they can still create the same amount of coins without the environmental burden. Within the Bitcoin blockchain, there have been calls towards moving to more efficient hardware solutions that can optimize profit margins and manage to consume inexpensive energy. There’s also a demand for sustainably sourced power to replace conventional sources that are more polluting.
The advances in mining hardware efficiency have been quite substantial, with more expected to appear in the near future. While the upfront costs of purchasing these devices might be higher, operational costs are reduced over time. Wind and solar power are also becoming more cost-competitive, making them appealing to the mining industry. Since these changes are expected to hold and remain relevant, you can expect to notice a decrease in Bitcoin’s carbon footprint.
Ethereum Going Higher
While the beginning of 2023 showed much promise concerning improvements in cryptocurrency prices, the following months have recorded a decrease in the values or, at the very least, a stagnation. Some analysts believe that this is a positive thing. Cryptocurrencies have a reputation for volatility, and if the prices were to soar suddenly from the slump they had been in, things wouldn’t look so great for the market. However, those who believed the market would soon turn bullish saw their plans remain unfulfilled and had to adjust their strategies yet again. Currently, at roughly $1,797, the ETH price hasn’t surpassed the $1,840 mark since last August. According to analytics companies, however, this can be beneficial, as the network hasn’t created transaction barriers due to high demand. This means that there’s still the potential for Ethereum to reach the $2,000 milestone and, perhaps, even surpass it.
Whale Transactions
Since the beginning of 2023, whale transactions have been quite popular within the crypto environment. These investors are either individuals, retailers or organizations that possess substantial amounts of funds. Using them to perform transactions directly influences the prices of cryptocurrencies, manipulating values and changing the market for everybody. They also typically own much larger asset holdings than the average investor, providing them extra leverage.
On Saturday, March 18th, a sizable whale transaction sent shockwaves through the market and caused the slow ascent of Ethereum to take yet another plunge. The largest altcoin faced further uncertainty as investors waited for new developments to appear, apprehensive about adding their capital to a venture that had recently undergone serious changes. The market had recently managed to surpass the $1,800 mark.
However, after over $33 million, the equivalent of 18,657 ETH, was transferred, traders became concerned. Many halted their activities until further developments, yet it seems that things have been looking up recently, with the Ethereum price slowly but surely on the mend. It isn’t just the transaction itself but also the potential for a sell-off that leaves ETH vulnerable to a decrease in value.
Regulations
There have been increasing conversations surrounding the necessity of imposing regulations on cryptocurrencies. This conversation has emerged largely because digital assets are increasingly entering mainstream markets and should be treated as traditional holdings as a result. However, the crash of several businesses and exchanges over 2022, which seemingly continues to trail into 2023, has convinced lawmakers, and even crypto users themselves, that some type of regulatory action is in order.
The US Securities and Exchange Commission is one of the first to enforce actions against exchanges that used practices which could potentially jeopardize transactional safety. In the UK, cryptocurrencies, tokens, and other digital holdings have been officially included in tax forms. Taiwan has also recently announced that it plans to establish a monitoring body to oversee the industry from its shores.
Recently, an artificial intelligence project has been discovered to be responsible for stealing nearly $1 million from users in what has so far appeared to be a legitimate scam and not a functional error. Users have been urged to revoke all permissions granted to the project and to remain vigilant in order to protect themselves from further infringements.
These events raise concerns about the safety of cryptocurrencies. However, as markets progress and things gradually change, more regulations are likely to appear, which can improve the overall stability of cyber holdings, making them less vulnerable to shifts and fluctuations.