Introduction
Bitcoin and the wider market recently corrected downwards, with some of the gains from January being given back. While experienced traders expected a technical correction, the US Securities and Exchange Commission (SEC) ended up being the culprit, lifting the staking program of Kraken and sending the market down into uncertainty.
Change in Trend?
The big question is whether the recent price drops indicate a change in trend or whether Bitcoin is simply taking a breather. According to Delphi Digital, Bitcoin is in for a rollercoaster ride in 2023. Analysts Kevin Kelly and Jason Pagoulatos explain that the positive start of the year was due to “recent increases in global liquidity.”
However, both Kelly and Pagoulatos believe that macro-economic headwinds will plague the market at least until the third quarter of 2023. Other indicators, such as the recent surge in the US dollar, suggest that Bitcoin could face challenges in the coming months.
No Change in Federal Reserve Rates Yet
Retail and institutional investors have speculated for months about a change in Federal Reserve rates, but the Fed has not made any moves to change course. Since March 2022, rates have risen by 4.50 percent, and for now, the expectation is for two more rate hikes, ending in a range of 5.00 to 5.25 percent.
The market is not yet in a bullish territory due to the fact that US inflation is still higher than the target of 2.0 percent, and the labor market is still strong.