The cryptocurrency market is probably waiting for another collapse of quotations in the near future. Analysts of the Nansen research platform came to this conclusion after considering the correlation between the S&P 500 index and cryptocurrencies.
As experts expect, the recession in the United States will affect not only stocks, but also cryptocurrencies. Given that the US Federal Reserve will continue its tight monetary policy in 2023, the risk premium for investing in stocks will rise even higher. This, in turn, will lead to an increase in the risk premium for investing in cryptocurrencies, Nansen believes.
Against the background of the deteriorating macroeconomic situation, analysts assume that next year the cryptocurrency market will collapse even lower, and perhaps for the last time within the current cycle (until 2024). However, it is unclear how soon the fall may occur and how long the market will be at the bottom.
In August, American billionaire Elon Musk admitted that a recession could trigger a number of bankruptcies, and the period itself could continue until the end of 2023. Although Musk acknowledged that "making macroeconomic forecasts is a lost cause," he still suggested that the coming crisis would be "relatively mild."
In particular, he referred to the "relatively low debt levels of most companies." This allows us to hope that the recession will remain in the range "from mild to moderate, lasting about eighteen months," Musk said.
Mike Novogratz, the head of the Galaxy Digital venture crypto firm, adheres to similar deadlines. In his opinion, bitcoin will continue to remain in the zone of uncertainty as long as the US Federal Reserve tries to curb inflation risks. He also suggested that it is high time for the cryptocurrency market to pause due to excessive activity.
Novogratz called the takeover of the American crypto exchange Coinbase "by some large traditional financier" one of the worst-case scenarios of the recession. Coinbase itself has been cutting operating costs for a long time in anticipation of the deterioration of things in 2023
