Looking back, 2022 was not the finest year for the crypto market, and the main factor was the macroeconomic condition of traditional markets. Due to the rising inflation, the U.S. financial regulator was forced to support a harsher monetary policy, which stifled all risk-taking investing tools and crashed the crypto markets.
According to Michael Burry, 2023 won’t be any different. Burry asserts that although inflation has peaked, this is not the cycle’s last high.
He further predicts that the CPI will be significantly lower in the coming year, and it could even be negative in the second half of 2023. The recession that everyone has been anticipating will occur as a result of such a sharp decline.
Burry predicts another rise in inflation, which is unfortunate for cryptocurrencies and other risk-taking industries. If the expert is correct, a crucial rate spike will force the market to deal with yet another wave of pressure.
It is evident from past projections made by other conservative financial analysts that Burry is not the only one who anticipates a worsening of the macroeconomic situation in the financial sector. Unfortunately, in 2022, the S&P 500 and Bitcoin experienced their highest correlation ever, thereby making the performance of digital gold dependent on the index.
Recent statistics also indicated that many institutional investors are betting on a decline in the price of Bitcoin and Ethereum in the near future. Given that short product inflows accounted for the highest inflow on record—about 75% of the total inflows—the research shows that investors have experienced extremely negative feelings in November.
The downward trend in assets under management in cryptocurrency investment products, which recently touched two-year low levels, can also be used to infer a major portion of unfavourable attitudes for the asset class. According to data from the previous week, the majority of investors invested a significant amount of money in short-Ethereum investment products, totaling $14 million. According to Todayq News, JP Morgan also projected that Bitcoin values would fall and reach $15,000 levels.
The price has, however, slightly increased since then. At the time of writing, the price of Bitcoin is $16,717.59, up 0.64% from yesterday and approximately 1.08% over the previous five days, while the price of Ethereum is $1,215.48, up 1.30% since yesterday and about 2.20% over the previous five days.