Crypto market catalysts to watch for to start the bull run in 2023 as they are about to see a positive reversal
Since its start, cryptocurrency as a whole has experienced some significant downturns. However, a number of events might help the cryptocurrency market recover this year and spark the sector’s expansion. For cryptocurrencies, the previous two years have been full of twists and turns. The cryptocurrency market plummeted for weeks after China stopped cryptocurrency mining in May 2021. When Jack Dorsey, the former CEO of Twitter, held “The B Word” event, most cryptocurrencies experienced a comeback and reached record highs. Other elements have also helped to improve the mood, either directly or indirectly. Nevertheless, the collapse of three important platforms in 2022 caused the market’s capitalization to slip below the trillion-dollar threshold. Bitcoin, the biggest cryptocurrency, has consolidated around the $16,000 mark. However, given the beginning of the near year, a comparable catalyst (or catalysts) for a positive reversal in early 2023 may be at work in this situation. There could be some catalysts to look forward to in 2023.
The Federal Reserve is the first possible catalyst for cryptocurrencies. Since March, the Fed has rapidly increased interest rates in an effort to combat inflation. Trillions of dollars have been forced out of stocks, cryptocurrencies, and other assets as a result of this. They have been crashing as a result. This money will continue to flow out of all assets if the Fed keeps raising interest rates. The Fed is expected to keep raising interest rates until either the banking system collapses or inflation finally declines. The high interest rates offered by assets like U.S. government debt will make them appealing to investors if the Fed decides to maintain its high-interest rates, though. This might restrict investment in risky assets like cryptocurrencies. The Fed’s pause, though, ought to prevent these markets from declining any further.
The second probable cryptocurrency driver also has something to do with the Fed, albeit in a different way. These foreign currency obligations cost more when the Fed raises interest rates. To continue repaying their U.S. dollar debts, individuals and institutions must sell their home currencies and purchase U.S. dollars. The value of the dollar increases in relation to other currencies as a result of this enormous demand for dollars. Due to the fact that the U.S. dollar is also used to purchase energy, this effect is particularly pronounced in nations with an energy crisis. When a nation struggles with energy, it must print more of its own money in order to purchase dollars in order to pay for the more expensive energy as winter draws near. As a result, demand for dollars from such nations is likely to rise.
Unmentioned as a potential stimulus for the cryptocurrency market are the nations preparing to make Bitcoin legal tender. Since El Salvador did just that, there have been numerous reprimands. Tonga, though, is at least one other nation that intends to follow in El Salvador’s footsteps in 2023. This year, the kingdom will make Bitcoin legal tender. If Tonga follows through with these ambitions, it’s possible that other tiny nations would follow suit. Keep in mind that the U.S. dollar is devaluing other currencies, and nations all over the world are implementing CBDCs to prevent their national currencies from collapsing. Small nations may not all have the financial means to implement their CBDCs, nevertheless. One possibility is raised by this: one way or another, these nations could adopt cryptocurrency. Nearly all of these triggers are slated for 2023 at some point. Hopefully, one of them will pass; that may be all that is necessary to stop the crypto market from bottoming out.