It started last week with Bitcoin (BTC) falling from $22,000 to just under $21,000 within hours. In addition, the US Federal Reserve’s increase in interest rates by another 75 basis points marked the week. This situation was expected to cause volatility in BTC. However, unlike previous examples, BTC started to appreciate rapidly and reached $23,000. Although it seems to be gaining momentum at the moment, the coin is trading as much as 70 percent below its all-time high. Many investors wonder when the bear market will end. Here are the predictions of experts about what will happen in the market…
CoinShares is optimistic for Bitcoin
Digital asset manager CoinShares talks about the intersection of economic factors and government policy decisions. With his recession talks, he explains how Bitcoin’s performance may differ from other investments. According to the firm, the US Federal Reserve may continue to raise interest rates throughout the summer. However, they also believe that they will adopt a softer outlook on economic growth from now on. This is expected to cause a significant weakness in the dollar.
The firm predicts that if the FED fails to curb inflation and the strength of the dollar declines, BTC will rise. He says growth stocks will suffer more from worsening economic conditions. CoinShares also says that while BTC isn’t rallying, the leading cryptocurrency could reward investors. CoinShares uses the following statements:
While Bitcoin’s price performance is weak in the face of an aggressive Fed, this current gap in price performance may be short-lived.
The company analyzed how the recession will affect Bitcoin (BTC)
The latest analysis comes two months after CoinShares discussed at length how a recession would affect Bitcoin’s price outlook. As we reported as Kriptokoin.com, at that time, the company was talking about how interest rates were increasing. While measuring how the strength of the US dollar affects the valuation of BTC, he also drew attention to oil prices and recent turmoil in the crypto markets.
CoinShares also referred to Bitcoin as “both a growing asset and a rising store of value.” Therefore, he predicted that comparative similarities with stocks would decrease over time. In the analysis, they concluded:
Unfortunately, there are many unknown factors. Despite this, we believe that the US and the rest of the world will go into economic decline in 2023. Perhaps it will be stagflation that then progresses to recession? We believe that Bitcoin is a good insurance policy in the face of this monetary policy mess, as the liquidity trap has really taken hold of central bankers.
Pantera Capital CEO: The worst is over!
Morehead, whose firm manages around $5.1 billion in assets, states that the worst of the crypto crash is over. He says the slump occurs in May and June, when stresses peak.
I think we’re really close to the end. With any leverage, and especially with DeFi smart contracts, things get liquidated pretty quickly. The market has actually been falling for eight months. The highest level was in November, so whatever stresses we will see in the system, they basically peaked in May and June. We already have companies in the bankruptcy process. It’s like we’ve seen everything we need to see. Markets may start trading on fundamental factors again.
DeFi protocols performed well
Pantera Capital CEO states that during the worst months for the crypto industry this year, nearly all DeFi protocols have performed well. He says it is centralized crypto lending platforms that have failed. Morehead uses the following expressions:
There are many skeptics about blockchain, and many support the view that DeFi has failed. This is not really true. There are definitely some failures in the blockchain ecosystem. However, almost all of them are central lending counterparties. Which, you know, are actually banks. Some of these institutions worked just like banks. Then they had an old-fashioned getaway at the bank. They invested in illiquid things. It is the central credit companies that have essentially failed.
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