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The cryptocurrency market has rebounded in recent weeks, with Bitcoin and other digital assets barely recovering from losses following the collapse of the FTX cryptocurrency exchange. Many investors are now wondering if this is the end of the crypto bear market or just a temporary recovery.
To answer this question and clarify what crypto investors can expect in the coming months, I spoke with Alex Benfield and Juan Villaverde, crypto analysts at the independent rating agency Weiss Ratings. (I'm a freelancer for Weiss Ratings.)
Both analysts agree that the cryptocurrency market is currently in a downward spiral with a mixed year ahead. They expect significant volatility and upswing in the first half of the year, but a softer second half. They also believe that the current macro environment has been absorbed by the market, and investors believe that interest rates will continue to rise and inflation will continue to fall.
"The end or bottom of a bear market is a process, not a single moment," Benfield said. “The cryptocurrency market is showing signs that the process has begun. There will be ups and downs along the way, and 2023 will be a bit of a mess.
Asked about the current macro environment of high inflation, rising interest rates and recession risks, Benfield said "markets seem to have absorbed the news and investors can believe that rate hikes are coming to an end and inflation is continuing to fall." He added that "investors have come to terms with the collapse of FTX and fears of further contagion have subsided."
On what to expect from the Bitcoin and cryptocurrency markets this year, Benfield said that "even if this rally continues to higher levels, there will be a significant pullback. This downward process will be a "step forward, half step back "pattern follows. pattern. Cryptocurrencies open the year. We expect it to close higher than it has been, but maybe not much higher."
Villaverde, on the other hand, expects volatility to become the norm for the cryptocurrency market in 2023. "While Bitcoin could end the year where it is today, we expect significant growth in the first half of the year. In our view, the second half of 2023 looks softer," he said.
I would love to hear your thoughts on the current state of the crypto market and what you can expect in 2023. Do you agree with the analyst's opinion? Do you really think we are seeing the end of the bear market or is this just a temporary recovery? Share your thoughts and predictions in the comments below.
Read more: After the collapse of FTX, Celsius and Genesis, a multi-billion dollar Crypto question remains: Will customers ever see their money again?
Also read: "Bitcoin is an inflated scam, it's a beloved breed," says JP Morgan CEO Jamie Dimon.