Summary: The macro environment in 2023 plays a crucial role in driving the crypto market trends.
The Macro Situation Going Into 2023:
- Crypto market struggles in 2022 due to worsening macroeconomic conditions.
- War in Ukraine, inflation surge, China's lockdown, and unfriendly US relations contribute to the downturn.
- Central banks shut down the money printer.
- Reduction in global financial market liquidity leads to decreased crypto prices.
The Macro Situation In 2023 (So Far):
- Positive start to 2023 with a combination of crypto-specific narratives and macro data.
- Bitcoin up over 40% in 2023, ETH liquid staking derivatives gain popularity, and fewer sellers at $16K Bitcoin valuation.
- Liquidity injection and inflation rate decrease.
- People's Bank of China increases liquidity and inflation rates decrease faster than anticipated, benefiting the crypto market.
The Macro Outlook For The Rest Of 2023:
- Three crucial questions determine market trends.
- Will inflation reach the Fed's 2% target? Will there be a recession? Will the Fed "pivot"?
- Stronger US Dollar Currency Index poses challenges and a potential recession depends on unemployment rates.
- Recession depends on low unemployment rates, while inflation staying high could challenge the Fed.
- Crypto likely in an accumulation mode in 2023, with the potential for breaking out of its current range.
- Possible rate cuts by September 2023 could catalyze the breakout.
- The macro environment in 2023 significantly influences medium-term price development.
- More liquidity and lower interest rates serve as favorable factors for the crypto market.