Bitcoin and Ethereum to battle rising liquidity pressures in 2023, here’s what to expect


  • Bitcoin and Ethereum prices wiped out all gains from the euphoric highs of 2022 under increasing selling pressure in the bear market.
  • Economic data from November to December show signs of recession in the US and Europe becoming apparent, the Fed could continue to be hawkish.
  • Traders in the interest rate market expect rates to peak in March 2023, increasing liquidity in cryptocurrencies like Bitcoin and Ethereum.

Bitcoin and Ethereum could see an increase in liquidity pressure in the first quarter of 2023, as the US Federal Reserve maintains its aggressive policy. Average forward sentiment in the options market remains bearish. A rebound in cryptocurrency prices is a long way off according to the macroeconomic outlook.

Also read: Bitcoin on track to be undervalued as stablecoin reserves fall to pre-2021 bull run levels

Bitcoin and Ethereum Prices Could Crumble Under Selling Pressure

Bitcoin Y Ethereal prices plummeted with increasing selling pressure in 2022. The top three factors influencing cryptocurrency prices were the aggressive policies of the US Federal Reserve that favored higher interest rates for curbing inflation, the collapse of the LUNA token ecosystem, Terra’s UST and the spread of FTX contagion.

According to Blofin Academy analysts, in the first half of 2023 Bitcoin and Ethereum will face strong liquidity pressure. Economic data for November and December showed signs of recession in the US and Europe becoming apparent. While the US economy remains strong, there is enough evidence that the US Federal Reserve will maintain a hawkish policy until 2023.

High inflation leaves the European Central Bank with no choice but to aggressively raise interest rates.

EU and US inflation rate

EU and US inflation rate

Experts believe the US Federal Reserve’s interest rate ceiling will remain in place for at least six months with rates expected to peak in March 2023.

Therefore, liquidity pressure on the two largest cryptocurrencies by market capitalization, Bitcoin and Ethereum, will remain high.

Investor sentiment in options remains bearish

In the options market, the average forward sentiment is relatively bearish.

Sentiment has not improved since the start of 2022. Institutional and professional investors are concentrated in the options market, so an analysis of the changes helps to effectively judge the direction of the crypto market.

The options-based crypto industry including centralized/decentralized options trading businesses, structured products, options market data analysis it will develop further in 2023 as more professional institutions, market makers and individual investors join the market. Bitcoin and Ethereum holders could suffer more in the first quarter of 2023 as selling pressure mounts on these risky assets.