US-based cryptocurrency exchange Coinbase shared its pessimism about the altcoin market in a new report. He suggested that only two cryptocurrencies would remain popular.
Coinbase says crypto winter will last until 2023, especially for altcoins
Coinbase analysts predict that investor choices will shift towards “higher quality” cryptos like Bitcoin and Ethereum. Experts attribute this to a number of factors, including tokenomics and market liquidity. The report also predicted that altcoins will remain out of sight in the coming year. The report shared by Coinbase Institutional on his Twitter account includes the following statements:
We think that the willingness of investors to accumulate altcoins has been severely affected by the de-leverage in 2022 and it may take months to fully recover.
Individual investors are moving away from altcoin projects
Historical data shows that bear markets usually last at least 18 months. Therefore, the crypto winter will have until the second half of 2023 before the market leaves. Coinbase confirms this idea, noting that the confidence crisis will prolong the downturn for “at least a few months.” He also states that it is unlikely that crypto performance will diverge from traditional risk assets in the first few months of 2023:
Liquidity constraints can also disrupt normal market operations in the short term, as many institutional entities take into account that assets are locked in FTX’s bankruptcy proceedings.
Money will flow into these two cryptocurrencies
According to the exchange, those benefiting from crypto will be higher quality tokens and cryptocurrencies, primarily Bitcoin and Ethereum. According to the report, long-term BTC investors hold 85% of the circulating supply. Ethereum continues to dominate as the industry standard for smart contracts.
The report also noted that the trend towards self-regulation and decentralized finance will continue after the collapse of FTX and the Alameda scandal. More regulation and investor protection in 2023 will likely increase institutional investor confidence as well. However, individual solutions will potentially drive crypto winter away from the market.
Coinbase (COIN) shares hit an all-time low on Tuesday
Shares of COIN hit ATL on Tuesday as the US-based exchange continues to struggle with low trading volume amid falling crypto prices. Continued declines in the stock have slashed Coinbase’s market cap to less than $8 billion.
Despite a marginal increase at the time of writing, the COIN has previously dropped as low as $34.35. This latest drop contributed to a 21% drop in November. Shares are down 86% year-to-date and 91% from their all-time high shortly after going public in April 2021. As you follow on Kriptokoin.com, the exchange is also pursuing a Dogecoin lawsuit.