Mike McGlone, a Bloomberg commodities strategist, believes that the cryptocurrency market will rise again in 2023. In a new analysis, McGlone notes that the value of the cryptocurrency market declined by $1.3 trillion in 2022, as of early December, which is roughly equivalent to the combined decline in market capitalization of Amazon and Google.
According to McGlone, this decline shows that the cryptocurrency market is still in its early stages. He points out that the Federal Reserve’s aggressive tightening of monetary policy in 2022, which has contributed to a decline in the value of cryptocurrencies, may actually be a good thing for the market in the long term.
“The Fed’s most aggressive tightening in 40 years is a good reason for the macroeconomic ebb tide, but 2023 may be about which assets come out ahead as central banks pivot. If they do not shift to easing, the world may fall deeper into recession, with repercussions for all risk assets. Our baseline scenario is a prolonged deflationary period, in which the cryptocurrency market, as measured by the Bloomberg Galaxy Crypto Index, would gain,” said McGlone.
McGlone also believes that the dominance of stablecoins among the top five largest digital assets by volume actually demonstrates the value of Ethereum (ETH). He points out that Ethereum’s technology makes it possible to trade digital dollars quickly and cheaply.
“Our view is that in the long term there is little to stop this advancing technology from doing something similar to what the futures and exchange-traded fund markets did,” said McGlone. “Non-fungible tokens and decentralized exchanges are additional advances that Ethereum has made possible.”
In conclusion, McGlone believes that the cryptocurrency market will rise again in 2023, and that Ethereum (ETH) and other cryptocurrencies will outperform traditional assets. He points to the value of Ethereum’s technology and the potential for further advances in the space as reasons for optimism.