Bitcoin and cryptocurrencies will continue to hold their current price ranges until the end of the year, before the ‘crypto winter’ thaws in the spring of 2023 when inflation will have peaked and central banks unwind their rate hikes.
This is the prediction of Nigel Green, the chief executive and founder of deVere Group, one of the world’s largest independent financial advisory, asset management and fintech organisations.
“We saw this week how Bitcoin and crypto is going to react when major central banks take their foot of the economic brakes and slow down their interest rate hike agenda as inflation peaks,” he says.
“Bitcoin jumped around 1% on Wednesday after minutes from the Federal Reserve’s November meeting indicated that the majority of U.S. central bank officials want a slower pace of rate hikes going forward.”
The deVere CEO continues: “Assets that most benefitted from low interest rates were, naturally, hit hardest in 2022 by the hikes. These include stocks, especially in the tech sector, and cryptocurrencies, amongst other risk assets.
“We expect as the programme unwinds, which is likely to be in the second quarter of 2023, these will be the assets that will experience some of the biggest rallies.
“Although, the high-octane rush of previous rallies is unlikely, instead we will see a steadier, continued upward trajectory for Bitcoin when the unwind kicks off.
“Until then, many serious, long-term investors will be using the current lower valuations as a buying opportunity.”
Investors are starting to realise that, clearly, headwinds remain for economies around the world, but that some quality assets, like Bitcoin, are currently cheap. “Confidence is creeping back into the markets,” says Nigel Green.
He concludes: “One good thing about the hikes has been that as the sugar-rush of free money faded away, we could see the real value of assets.
“Despite coming down 70% from its hype and heat-fuelled November 2021 high, Bitcoin remains the best-performing asset class of the decade.”