Posted: Jan 25, 2023 at 7:03pm ET
The cryptocurrency market has rallied in recent weeks, with bitcoin BTCUSD and other digital assets nearly recouping their losses since the collapse of cryptocurrency exchange FTX. Now, many investors are wondering if this is the end of the cryptocurrency bear market or just a temporary revival.
To answer this question and shed more light on what crypto investors can expect in the coming months, I spoke with Alex Benfield and Juan Villaverde, crypto analysts at Weiss Ratings, an independent ratings agency. (I’m freelance…
The cryptocurrency market has rallied in recent weeks, with bitcoin
and other digital assets nearly recouping their losses since the collapse of the FTX cryptocurrency exchange. Now, many investors are wondering if this is the end of the cryptocurrency bear market or just a temporary resurgence.
To answer this question and shed more light on what crypto investors can expect in the coming months, I have spoken with Alex Benfield Y John Villaverdecryptanalysts in Weiss Ratings, an independent rating agency. (I am an independent contributor to Weiss Ratings.)
Both analysts agree that the crypto market is currently bottoming out, with a mixed year ahead. They expect to see volatility and a significant rally in the first half of the year, but a softer second half. They also believe that the current macroeconomic environment has been absorbed by the market and that investors speculate that rate hikes and inflation will continue to decline.
“The end or bottom of a bear market is more of a process than a singular moment,” Benfield said. “The crypto market is showing signs that that process has begun. There will be ups and downs along the way, and 2023 is bound to be a somewhat mixed year.”
When asked about the current macroeconomic backdrop of high inflation, rising interest rates and recession risk, Benfield said that “the market seems to have absorbed that news, and investors may be speculating that rate hikes will come to fruition.” end in the near future and inflation will continue to decline. He added that “investors have accepted the FTX collapse and fears of further contagion have subsided.”
In terms of what to expect from bitcoin and the crypto market this year, Benfield said that “even if this rally extends to higher levels, it will be followed by a significant pullback. This background process will follow a ‘one step forward, half step back’ kind of pattern. We expect crypto to end the year higher than when it opened, but maybe not much higher.”
Meanwhile, Villaverde expects volatility to be the norm for crypto markets in 2023. “Although Bitcoin may end the year more or less where it is today, we expect to see a significant rally in the first half of the year. The second half of 2023 looks smoother in our opinion,” he said.
I would love to hear your opinion on the current state of the crypto market and what you expect for 2023. Do you agree with the opinions of the analysts? Do you think we are really seeing the end of the bear market or is it just a temporary revival? Share your thoughts and predictions in the comments below.