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| gettyimagesbank |
By Lee Min-hyung
The cryptocurrency market is unlikely to achieve a major rebound at least until early 2023, as global monetary authorities will maintain a tight monetary stance for months to come, analysts said.
The forecast came amid a prolonged liquidity crisis, which the industry has been facing for the past year, after the U.S. Federal Reserve and other major central monetary authorities here and abroad carried out aggressive rate hikes.
Prices of major cryptocurrencies are also showing scant signs of a recovery and are hovering around the lowest level since the end of 2020. According to data from CoinMarketCap, Bitcoin was traded at $16,600 as of 1 p.m., Friday. The price of the world's largest cryptocurrency by market capitalization has been on a sharp decline from the second quarter of 2022 in the wake of the aggressive rate hikes.
Ethereum prices also displayed a similar curve during the same period. The value of the world's second-largest cryptocurrency plunged about 75 percent from its previous high recorded in November 2021, when the asset market bubble reached its peak amid near-zero interest rates at the time.
The overall sentiment in the crypto market also dipped to its lowest level throughout 2022 as a reaction to multiple crypto fiascos best represented by the abrupt meltdown of the once-promising Terra-Luna ecosystem and the shocking bankruptcy of the FTX crypto exchange.
Market analysts said it will be tough for the crypto industry to achieve a solid recovery anytime soon.
"Bitcoin continues to happily tread water and watch the storm pass as it fluctuates in a range of around $16,000 and $17,000," Craig Erlam, senior market analyst at OANDA, said. "That's broadly been the case over the last couple of weeks and it doesn't look like changing in the coming days, barring any unexpected headlines."
The analyst shared his pessimistic short-term outlook for the industry, saying that the crypto market will remain in the doldrums for the time being, as no game-changing adjustment of macroeconomic circumstances is expected even in 2023.
"The question for many now is whether it has bottomed out and how long it will take for confidence to return, enabling a strong recovery," he said. "I'm not convinced by either in the near term and think there are plenty more twists and turns to come early next year."
Other crypto experts said stablecoins will regain the spotlight as the major topic in the industry in 2023.
"In 2023, a hegemonic rivalry will intensify in the market of stablecoins," Kim Min-seung, a researcher at Korbit's research center, said. "Tether, Circle and Binance will toughen their fierce competition to gain an upper hand for the global stablecoin market, as the usage of stablecoins is widely forecast to expand down the road."
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