After a chaotic year 2022 in the world of cryptocurrencies, the most famous cryptocurrency, Bitcoin, saw its price collapse by 65% in 2022 to reach just over $16,000, having peaked in November 2021 at nearly $65,000.
In Morocco, whose Bank Al-Maghrib remained cautious about cryptocurrencies in 2022, preferring to talk about crypto-assets such as “central bank digital currencies”, it was working on a regulation project which sets an operating framework for cryptocurrency exchange platforms.
“The bill that is being drafted aims to regulate cryptocurrency trading platforms. Like France, to take this example, there must be a licensing and approval system to precisely allow these platforms to offer their services to Moroccan consumers”, explained Adil Zbir last July. , responsible for the monitoring of the financial markets infrastructures and payment systems at Bank Al-Maghrib.
In the latest report for October 2022 by Chainanalysis, the largest blockchain analysis company, the company highlighted the fact that the volume of transactions in cryptocurrencies in the period July 2021-July 2022 had developed from 120.8% in Morocco over 12 rolling months . A craze that is actually present.
In addition, regarding Bitcoin, the craze is picking up at the start of the year. In YTD, the price of the first cryptocurrency increased by more than 25% to almost 21,000 dollars. Specialist in blockchain technology, Badr Bellaj explains the reasons for this development, which according to him are based on three main factors.
Investors expect an interest rate cut
Last year was characterized by high inflation and a deterioration in households’ purchasing power. To address this situation, the majority of central banks, starting with the Fed, raised their key interest rates.
At the end of 2022, the latest US inflation numbers marked a slowdown. For Badr Bellaj, this is one of the reasons why Bitcoin took off at the start of 2023. This has made traders optimistic and they expect that the peak of the Fed rate hike has probably been reached and that cuts will begin in the future”, notes the Blockchain specialist.
The market therefore perceives these first signals as the beginning of an exit from the crisis, despite the fact that benchmark financial institutions such as the World Bank have downgraded their growth forecasts for this year. On 10 January, the latter thus revised its global growth forecasts downwards, falling from 3% in June last year to 1.7%.
A rebound effect after the FTX crash and an opportunity for institutional investors
Cryptocurrency investors have also seen a relaxation after the period of torpor caused by the bankruptcy of one of the pillars of the industry. The platform FTX went bankrupt on November 11, 2022, causing the loss of billions of investment dollars due to risky financial arrangements and potential conflicts of interest.
But it seems that after two months, the timidity in the markets has subsided. “This is a market correction after the bankruptcy of FTX. A fear then took hold of the cryptocurrency market and Bitcoin in particular. Now this fear has disappeared. Confidence is gradually returning to the investors. the investors,” says Badr Bellaj.
This fear was combined with another regarding the various systemic bankruptcies, including the Binance platform. “There were fears about their solvency, and therefore Bitcoin was stagnant at quite low levels. Then announcements from Binance about business expansions in Europe, especially in Sweden, calmed the market”, continues our interlocutor. .
The sharp drop in Bitcoin in 2022 was also a very good opportunity for buyers, especially institutional investors with a long-term view. “When we talk about investors, we are talking about large buyers who are called ‘Bitcoin whales’. These are investors who have enough Bitcoins or cryptocurrencies in general to influence the market. These people have long term strategies. When Bitcoin stabilized for several months at a fairly low level, around $16,000, they judged, with the aforementioned factors, that it was the right time to stock up on Bitcoin by buying them en masse, our interlocutor explains.
A final factor can also be added to the recent reasons for the rise in Bitcoin’s value. It’s about ‘halving’ bitcoin. But what is it? “This means that the amount of Bitcoins generated by a block will be halved. Therefore, long-term investors believe that the value will increase in 2024 and 2025”, explains Badr Bellaj.