BitMEX Outlines Three Scenarios for Crypto This Year, Says Market Recovery a Likely Outcome

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BitMEX Outlines Three Scenarios for Crypto This Year, Says Market Recovery a Likely Outcome

Digital asset exchange BitMEX is unveiling its forecast for crypto this year as the market faces a potential change in the macroeconomic landscape.

In a new blog post, BitMEX jgħid crypto could take three different routes this year depending on the policies enacted by the Federal Reserve and other regulatory agencies.

In scenario one, the exchange says that crypto might witness a recovery in risk appetite should the Federal Reserve take a step back in hiking interest rates. According to BitMEX, a Fed pivot could open the floodgates for global capital markets and trigger a rally for risk assets, including cryptos like Bitcoin (BTC) u Ethereum (ETH).

“With the crypto industry having learned the lessons of 2022 (notably those taught by entities including Three Arrows Capital, FTX and Genesis) and ridding itself of badly run businesses and suspect models, we should see a swift and healthy rebound in high-quality assets, such as Bitcoin and ETH.” 

BitMEX also highlights that scenario one is their core hypothesis based on various economic forecasts and the possible deceleration of inflation.

As for scenario two, BitMEX says that crypto could face an extended bear market if inflation remains persistently high, forcing the Federal Reserve to continue raising interest rates. According to the exchange, this scenario seems less likely as inflation is starting to show signs of slowing down.

For the third scenario, BitMEX sees crypto becoming a safer asset class as the government creates policies that protect investors. The exchange says that crypto regulation involving trading, custody and investment could accelerate throughout the year. In this scenario, BitMEX forecasts a rise in crypto adoption and the emergence of new use cases for blockchain technology.

Says the exchange for scenario three,

"Bitcoin and ETH will re-emerge as the dominant virtual currencies, while many retail users will get their first taste of crypto through the rise of next-gen gaming, NFTs [non-fungible tokens], Web3 and the metaverse, making crypto a more comprehensible, immersive experience.”

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