11 things to expect from the Crypto market in 2023
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Loading... - Busara Laizer
- 01 Feb 2023
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The crypto market has had a blazing start to the new year, with flagship cryptocurrency, Bitcoin, posting a Year-to-Date (YTD), return of over 40% as of the time of this reporting.
The rally in the price of riskier assets is a result of the slowdown in the increase of interest rates across both developed and emerging markets, which has made the appeal for riskier assets stronger.
While we still have a high-interest rate environment, especially in developed economies, investors are taking the risk that over time, the interest in interest rate will stop sooner rather than later.
It is important to know what to expect for the remainder of the year. Analysis by Matthew Sigel, the Head of Digital Assets Research at VanEck, an asset management firm with Asset Under Management totalling $68 billion, shows what he expects from the cryptocurrency market in the year 2023.
We are already seeing some of his predictions come to the past, with the recent rally seen in the market.
1. Bitcoin to Test $10-12K In Q1 Amid a Wave of Miner Bankruptcies
According to Sigel, he explains that the MVIS Global Digital Assets Mining Index median market cap is now only $180 million, with nearly all constituents burning cash and trading well below book value. With Bitcoin mining largely unprofitable given recent higher electricity prices and lower Bitcoin prices, he predicts that many miners will restructure or merge.
2. In the Second Half Of 2023, Bitcoin Will Rise To $30,000
Sigel explained that Bitcoin and the broader crypto ecosystem have suffered through a brutal bear market in 2022. Numerous companies in the space have imploded and the sentiment is quite poor. Bitcoin has traded like a risk asset over the prior year and has shown price sensitivity to interest rate hikes.
He further explained that one reason why Bitcoin has reacted poorly to higher rates is that the political response to higher inflation in developed markets has been to attempt to cap energy prices, widen sanctions, and micro-manage economic activity to facilitate the “energy transition.”
Sigel concluded by stating that in developed markets, he thinks consumers will see Bitcoin act as a store of value over time and a hedge against M2 inflation rather than overt CPI inflation. In emerging markets, the focus is more on remittances and neutral alternatives to dollar hegemony.
Another reason he gave for this price prediction is the strong possibility of a global recession. Sigel explains that to be the case, he expects that the Federal Reserve would likely pause raising rates amidst softening inflation, while money printing and government budget deficits continue. Read More…
