In 2023, the Federal Reserve's cessation of interest rate hikes may potentially drive a short-term rebound in the cryptocurrency market, but there remains significant uncertainty as to whether it will truly mark the beginning of a bull market in the crypto sphere. Several factors can be considered in making this judgment:
-
The Federal Reserve's interest rate hikes have suppressed economic growth and the performance of risk assets. Once these rate hikes cease, the pressure will be relieved, benefiting risk assets like cryptocurrencies and potentially driving a short-term market rebound.
-
However, the Federal Reserve's interest rate hikes have not resolved the issue of inflation; they have only slowed down its growth. This means that the real economy has not fully recovered, and market expectations may still be cautious. This could limit the medium-term performance of the market and make it difficult to form a bull market.
-
The fundamentals of the crypto sphere itself also need improvement, such as increased trading activity, a clear regulatory environment, and the implementation of more blockchain projects. If the improvement of the crypto sphere's fundamentals relies solely on changes in Federal Reserve policy and the fundamentals remain weak, it will be difficult to generate a long-term bull market.
-
Macroeconomic conditions also need improvement, such as a reduction or improvement in the unemployment rate and weak consumer spending under the pressure of Federal Reserve interest rate hikes. If the macroeconomic environment remains weak, it will be difficult to sustain market enthusiasm and drive capital inflows.
-
The performance of the U.S. stock market is also an important reference indicator. If the U.S. stock market experiences a sustained rebound and moves away from a bear market, it will attract more institutional funds into the cryptocurrency market and drive the formation of a bull market. Otherwise, the market will struggle to generate sufficient momentum.
In conclusion, the Federal Reserve's cessation of interest rate hikes in 2023 may potentially drive a short-term rebound in the cryptocurrency market. However, for it to truly mark the beginning of a bull market, improvements in the fundamentals of the crypto sphere, a positive macroeconomic environment, and continued strength in the U.S. stock market are necessary. Relying solely on Federal Reserve policy is unlikely to sustain a long-term bull market. It is important to closely monitor changes in other influencing factors and make comprehensive judgments on the market's future performance.