What will the market store for 2023?
An ever-growing list of cryptocurrency headwinds makes 2023 a defining year for BTC and the broader crypto market.
The fallout from the FTX collapse is likely to continue through the first quarter of 2023, as regulatory and enforcement chatter is likely to further test investor resolve.
A strong first quarter could restore investor confidence and provide a bullish outlook for the second half of 2023. However, crypto-related events and external market forces will determine the course of BTC and the broader crypto market throughout the year. These include,
- Federal Reserve decisions and interest rates.
- organizational reforms.
- Outcome of the SEC v. Ripple case.
- Russia and the war in Ukraine.
- Increased scrutiny of PoW protocols.
- Cryptocurrency exchange liquidity crisis.
For the stars to align with the cryptocurrency bulls, an SEC settlement with Ripple, an end to the war in Ukraine, relief from inflationary pressures, an end to rising federal interest rates, and a regulatory framework that supports innovation and catches bad players would underpin a BTC-recovery.
As always, best, worst, and worst-case scenarios will be on investors’ minds as we head into 2023. Regulatory reforms and the ever-increasing threat of recession will be the main drivers along with the outcome of the Securities and Exchange Commission v. Ripple case.
Predictions for 2023
With growing uncertainty in legislation, monetary policy, and economic and geopolitical uncertainty, BTC could take one of several paths through 2023.
In the base case scenario, easing inflationary pressures should allow the Fed to lift its foot off the gas. A soft landing and SEC settlement in its case against Ripple should support a return of BTC to $30,000. The base scenario is without fireworks and includes a progression towards a strong regulatory environment.
At best, the Fed is tempted to end its plans to bring inflation back to target to avoid a recession. Ripple wins its case against the SEC, and regulators introduce a regulatory framework for digital currencies that supports innovation and growth. Institutional funds are likely to flow into.
Institutional money inflows should restore investor confidence and give the bulls a chance at the 2021 ATH.
But in a worst-case scenario, the Fed pushes up interest rates, which leads to a sharp downturn. Most importantly, the SEC will win its case against Ripple and the lawmakers will give the SEC a mandate to regulate the digital asset space through enforcement.
The change in the regulatory landscape may cause investors to withdraw from the crypto space. This could lead to the collapse of more cryptocurrency exchanges. In such an event, BTC is likely to drop below $5,000, last visited in March 2020.
WalletInvestor.com has a Bitcoin bearish prediction that predicts that Bitcoin will drop below $10,000, and the prediction favors the worst case scenario.
Optimists Plan New ATH Despite Headwinds – Coinphony [SV]