Crypto Market Outlook 2023 H2: Bitcoin, Ethereum, Altcoins To Rally Or Headwinds Coming?

The crypto market in 2023 Q1 witnessed recovery from bear market, Operation Choke Point 2.0 by US regulators for crypto crackdown, the US SEC lawsuits against Binance, Coinbase, and other crypto firms for violating securities laws, and return of institutional investors with traditional firms Bitcoin ETF filings. Will the bullish outlook continue or are major headwinds coming in 2023 Q2?

Crypto Market Outlook in 2023

US GDP grew 2% in Q1, well above the 1.3% estimate. US Federal Reserve Chair Jerome Powell, the European Central Bank, and the Bank of England cleared at the annual ECB Forum event that central banks will continue raising interest rates in 2023 H2. Powell on Thursday reiterated two more hikes this year.

The market expects the US Core PCE inflation data, Federal Reserve’s preferred gauge to measure inflation, to come in at 4.7%. It will cause the US Fed to continue hiking rates in H2, as CME FedWatch indicates an 87% probability of a 25 bps in July. The US Treasury General Account rebuilding and the US dollar will also impact crypto prices in the second half, with the US dollar index (DXY) rising again above 103 after two weeks.

Crypto analysts and Bloomberg analysts are bullish on Bitcoin price hitting $40,000 in July or early August as traditional finance firms including BlackRock, Fidelity, and Invesco filed for spot Bitcoin ETF. However, Bloomberg analyst Mike McGlone points to major headwinds for Bitcoin price in the next quarter due to high US recession possibility, central banks hiking rates, and other macro reasons. Meanwhile, crypto traders brace for $7 billion in Bitcoin and Ethereum expiry today, June 30, which is one of the largest and brings major volatility in the crypto market.

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Bitcoin, Ethereum, and Altcoins to Rally

Many people already anticipating the return of the bull market in 2023 H2 due to Bitcoin ETF, a $199 million institutional inflow in crypto after almost a year, and US dollar liquidity remaining satisfactory despite T-bills issue by US Treasury Dept.

Since mid-Jun, the reserves of stablecoins in major crypto exchanges have rebounded significantly, bringing a rebound in crypto assets such as BTC and ETH. Furthermore, the efforts on crypto regulations have resulted in a greater concentration of liquidity in established crypto assets, such as Bitcoin and Ethereum, which may prompt Bitcoin and Ethereum to enter the “technical bull market” earlier.

Moreover, Bitcoin occupies 50% of the crypto market cap and altcoins are under pressure. However, a decline in the BTC market cap expected in 2023 H2 could bring a sharp move in altcoins.

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