Opinion: Bitcoin and Crypto Surpass FTX Collapse, But Road Back Will Be Tough

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The cryptocurrency market has rebounded in recent weeks, with bitcoin BTCUSD, -1.90% 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 crypto bear market or just a temporary resurgence.

To answer that question and shed some light on what crypto investors can expect in the coming months, I spoke to Alex Benfield and Juan Villaverde, crypto analysts at Weiss Ratings, an independent rating agency. . (I am an independent Weiss Ratings contributor.)

Both analysts agree that the crypto market is currently in a bottoming process, with a mixed year ahead. They expect to see volatility and a meaningful recovery in the first half of the year, but a weaker second half. They also believe that the current macro backdrop has been absorbed by the market and investors are speculating on further lower rates and inflation.

The end or trough of a bear market is more of a process than a singular moment, Benfield said. The crypto market is showing signs that it has started this process. There will be ups and downs along the way, and 2023 is set to be a somewhat mixed year.

Asked about the current macro backdrop of high inflation, rising interest rates and the risk of recession, Benfield said the market seemed to have absorbed this news and investors could speculate that rate hikes will take end in the near future and inflation will continue. to come down. He added that investors have accepted the FTX collapse and fears of further contagion have diminished.

Regarding 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 substantive process will follow a one step forward, half step back pattern. We expect the crypto to close the year higher than it opened, but maybe not much higher.

Villaverde, meanwhile, expects volatility to be the norm for crypto markets in 2023. While bitcoin could end the year roughly where it is today, we expect to see a significant rally in the first half. The second half of 2023 looks softer in our view, he said.

I would like to know your opinion on the current state of the crypto market and what you expect for 2023. Do you agree with the analysts’ view? Do you think we really see the end of the bear market or is it just a temporary resurgence? Share your thoughts and predictions in the comments below.

More: After the collapse of FTX, Celsius and Genesis, the million dollar crypto question remains: will customers see some of their money again?

Also read: Bitcoin is a fad cheat, it’s a rock fart: Says JP Morgan CEO Jamie Dimon

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