- BitMEX analyzed the three scenarios the crypto industry would view in the upcoming years.
- The most likely scenario is that the crypto would eliminate the risk factors when Fed slows down interest rates.
- A “less likely” hypothesis is the possibility of an extended bear market if the inflation remains high.
BitMEX, the cryptocurrency platform, and derivative trading platform released the crypto forecasting for the current year, under the title “Crypto Outlook- Fundamentals vs. Sentiment: Three Scenarios to Watch in 2023”. The report analyses the impact of macroeconomic factors and volatile central bank policies on the evolution of the crypto sector in the coming years.
Notably, as the title of the report suggests, its basic agenda is to discuss three scenarios the crypto industry could possibly witness depending on the crypto regulators’ policies.
Initially, BitMEX asserted that the crypto industry would recover from the risky environment, citing “Risk Appetite Recovers,” provided, the Federal Reserve slows down the rate at which it hikes interests.
Interestingly, Stephen Lutz, the Acting CEO of BitMEX, commented that the “policy stance will have to be reversed”, adding:
As central banks continue to fight inflation, it will lead to a further decline in real economic activity. So, at some point in time, their policy stance will have to be reversed.
Secondly, the crypto exchange put forward a “less likely” hypothesis that stated the possibility of an extended bear market if the inflation remains high and the Federal Reserve continues to hike interest rates.
Nonetheless, BitMEX added that strong cryptocurrencies such as Bitcoin could withstand the negative trends in the crypto industry. Rupertus Rothenhauser, the Chief Commercial Officer of BitMEX commented that bitcoin has not experienced “such low volatility in at least the past six years” which is supposed to the “the equilibrium rate”.
Further, while citing the final scenario, the Chief Compliance Officer of the company stated that the crypto regulators would continue “to embrace the technology,” adding:
We expect regulators will continue to embrace the technology and the advantages that it brings in 2023, with discussions occurring at the most senior levels within governments, and crypto receiving more attention from policymakers than at any other time previously.
In addition, the platform narrated that the advanced regulatory policies have contributed to the safer classification of crypto assets. Such a categorization poses the possibility of higher crypto adoption in the next few years.
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