• The cryptocurrency market has seen a 1% gain in the past 24 hours, reaching a total market cap of $894 billion and a 6.5% increase in the last two weeks.
• Fixed-income manager Jeffrey Gundlach argued that bonds provide a more reliable indicator of future interest rates than hints and informal comments from Federal Reserve officials.
• If bond yields remain low, it could mean a more sustained rally in the crypto market this year.
The cryptocurrency market has been on a rollercoaster ride in recent months, with prices dropping by 64% in 2022 due to the Terra and FTX collapses. Despite this, there are signs of optimism in the market, with a 1% gain in the past 24 hours and a total market cap of $894 billion. This represents a 6.5% increase in the last two weeks, signalling that the market may have turned a corner.
However, in order for the crypto market to experience a sustained rally, macroeconomic indicators must also improve. Fortunately, inflation has been easing in certain countries and employment is on the rise. Furthermore, bond yields — particularly those of US Treasuries — suggest that the base rate of interest may not rise much higher than its current level.
This is good news for risk-on investors, as explained by fixed-income manager Jeffrey Gundlach. During a webcast on Tuesday, he argued that investors should look at what the market says over what the Federal Reserve says. If bond yields remain low, it could mean a more sustained rally in the crypto market this year.
In addition to this, analysts have pointed out that the current market environment is more conducive to crypto adoption. For example, the coronavirus pandemic has made it clear that a digital approach to money is necessary for economies to remain open and accessible. This could mean that businesses and individuals will become more accepting of digital currencies, such as bitcoin and cryptocurrency.
When taken together, all of these factors suggest that the crypto market could be set for a sustained rally in 2023. Although there is still a lot of uncertainty, the market is showing signs of improvement and the macroeconomic environment is more favourable than it was last year. If these trends continue, the crypto market could experience a surge in prices and adoption in the coming months and years.