Digital asset exchange BitMEX is revealing its forecast for cryptocurrencies this year, as the market faces a potential change in the macroeconomic landscape.
In a new blog post, BitMEX says that cryptocurrencies could take three different routes this year, depending on policies enacted by the Federal Reserve and other regulatory agencies.
In scenario one, the exchange says that cryptocurrencies could see a recovery in risk appetite if the Federal Reserve backtracks on raising interest rates. According to BitMEX, a Fed pivot could open the floodgates for global capital markets and trigger a rally in risky assets, including cryptocurrencies such as Bitcoin (BTC) and Ethereum (ETH).
“With the crypto industry having learned the lessons of 2022 (particularly those taught by entities like Three Arrows Capital, FTX, and Genesis) and shedding poorly run businesses and dubious models, we should see a quick and healthy rally in high-quality assets. , like Bitcoin and ETH”.
BitMEX also highlights that scenario one is its central hypothesis based on various economic forecasts and the possible slowdown in inflation.
As for scenario two, BitMEX says that cryptocurrencies could face a prolonged bear market if inflation remains persistently high, forcing the Federal Reserve to continue raising interest rates. According to the exchange, this scenario seems less likely as inflation is starting to show signs of slowing down.
For the third scenario, BitMEX believes that cryptocurrencies will become a safer asset class as the government creates policies that protect investors. The exchange says that crypto regulation involving trading, custody, and investment could accelerate throughout the year. In this scenario, BitMEX forecasts an increase in cryptocurrency adoption and the emergence of new use cases for blockchain technology.
The exchange for scenario three says,
“Bitcoin and ETH will re-emerge as the dominant virtual currencies, while many retail users will get their first taste of crypto through the rise of next-generation gaming, NFTs. [non-fungible tokens]Web3 and the metaverse, making cryptography a more understandable immersive experience.”
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