After three consecutive years of positive returns, Bitcoin (BTC) and crypto prices plunged in 2022. The world’s largest digital asset is down around 65% year-to-date (YTD) as central banks were forced to react forcefully to bring inflation down, hurting high-growth assets like Bitcoin.
Moreover, crypto-specific negative catalysts – the collapse of FTX – further dampened investors’ confidence in cryptocurrencies, a sentiment that is likely to weigh on prices in 2023 as well.
“The outlook for 2023 unfortunately remains more on the subdued side,” Canaccord Genuity analysts wrote in a note about digital assets.
As Canaccord sees “a quite high likelihood of a recession in 2023,” the analysts believe the crypto market will struggle to recover and return to 2021 levels in the near term. They also expect correlations between crypto and equity prices to “return to elevated levels.”
“In similar previous cycles the stock market has never bottomed until after a recession starts and looking across our fundamental technology stock coverage and expecting a generally lackluster Q4 reporting season in January and February, the outlook for equities early in 2023 appears muted,” they added.
On a more positive side, the analysts note that Bitcoin seems to have found some support near $16,000 while Ethereum’s platform economics “have never been stronger.”
“In the background developers are working feverishly on well-capitalized projects without the distractions of a bull market,” they added.
Net-net, while the analysts remain positive on crypto and Bitcoin in long-term, they acknowledge that “it could easily be ~2 years until a potential bull market returns.”
Bitcoin price trades around $16,600 today.
Source: Cryptocurrency - investing.com
