Note that some prominent blockchain industry figures have contrary expectations for 2023. In particular, co-founder of crypto exchange BitMEX Arthur Hayes published a market breakdown last week and made it clear that he is preparing to join digital asset buyers soon enough.

As a result, Arthur expects a positive first half of 2023. The market could tentatively deteriorate further due to an increase in the government debt ceiling, which will directly affect the risky asset category. Read more about the expert’s point of view in this article.

What will happen to Bitcoin this year?

According to analysts at the aforementioned Delphi Digital platform, 2023 will be “a real attraction for crypto”. They attributed BTC’s January price momentum to a “recent increase in global liquidity”, which is good for risky assets. That said, macroeconomic factors will continue to negatively impact markets until at least the third quarter of 2023, according to Cointelegraph.

High risk asset returns

One such factor is the US Dollar Index (DXY), which shows the performance of the currency’s value against a basket of the world’s six other most popular currencies. Here is what an analyst under the nickname Big Smokey writes about it.

Inflation data for December is below expectations, and February’s FOMC meeting and credit rate hike has clearly provided a much needed boost to investor sentiment. This took cryptocurrency prices out of the zone they have been in for months. But as shown below, BTC’s inverse correlation with DXY speaks for itself. DXY has been losing ground lately, rolling back from its September 2022 high of 114 to its current level of 101. As usual, when DXY falls, the price of BTC starts to rise.

Comparison of DXY and BTC dynamics

Looking at the dynamics of DXY last week, we can see that the index rebounded from the low of January 30 at 101 and reached a five-week high around 104. At the same time, Bitcoin hit a local high of $24,200 and began to pull back as DXY rose.

DXY

Jarvis Labs platform expert under the nickname JJ the Janitor advises investors to watch DXY’s behavior when it crosses moving averages with periods of 50, 100 and 200 days. If the DXY manages to consolidate above the 200-day MA, the cryptocurrency market could go into a correction again, the analyst believes.

Moving averages on the DXY chart

In addition to the dollar index, an important factor in predicting the dynamics of the crypto market remains the US Federal Reserve’s policy – namely, the continuous increase in the base lending rate to combat inflation. The latest round of hikes was relatively low at 25 basis points, which gave investors hope for a change in the Fed’s course in the near future.

However, during the last press conference after the Federal Open Market Committee (FOMC) meeting, Fed Chairman Jerome Powell hinted at the need for future rate hikes, arguing the state of the labour market in the United States. Nevertheless, analysts say that the bond market is already signalling that the Fed’s policy is too tight. Which means it may have to come to an end.

US Fed chief Jerome Powell

Typically, stocks and cryptocurrencies rise when the FOMC’s rate hike decisions coincide with market expectations. During the last round of rate hikes, everyone was expecting an optimistic speech from Powell, which is why his cautious comments led to another Bitcoin collapse.

Despite the bearish nature of the above issues, analysts at Delphi Digital maintain a more positive outlook for the second half of 2023. Here’s an excerpt from their report.

The need for more liquidity will become increasingly urgent by the end of the year. Problems in the labour market will also become more evident, giving the Fed an excuse to move to a softer policy. The reversal in global liquidity that we discussed late last year will begin to accelerate in response to weakening growth prospects and concerns about the growing vulnerability of sovereign debt markets.

This will support risky assets in the second half of 2023. The impact of changes in global liquidity on financial markets is usually delayed by 6-18 months, giving rise to a more optimistic outlook for 2024-2025.

In other words, the Fed cannot continue to "tighten the screws" forever, as this will also lead to problems in the economy. Therefore, experts believe that by the end of 2023, the situation with cryptocurrency yields will get noticeably better, and in the next two years, a new global market bubble is quite possible.

It should be noted that in the cryptocurrency industry there is indeed a popular theory that the new bull run will come and go tentatively in 2025. In that case, the market will retain the duration of the cycles, as it begins to grow and peaks about a year after the Bitcoin halving, which is the halving of miners’ reward per block of BTC. The next halving will take place in the spring of 2024.

That’s why Trezor CEO Matej Jacques spoke the day before about his desire to introduce a new flagship hardware wallet “before the next bullrun”. According to Jacques, this will happen just before 2025.

Trezor Model T hardware wallet

Popular experts can't seem to agree on the prospects for the cryptocurrency market. Either way, they agree that sooner or later the next bull run for digital assets will come. Accordingly, investors have reason to get involved with coins at least for the future. However, how much money to risk is traditionally up to everyone. The main thing is that a possible loss of assets due to a hack or market crash will not lead to problems in normal life.