The cryptocurrency market has posted a 1% gain in the past 24 hours, with its total cap reaching $894 billion. This represents a 6.5% increase in the last two weeks, signalling a hope that the market may have turned a corner after a difficult 2022.
There's no doubt that last year wasn't great as far as crypto's short history is concerned, what with the Terra and FTX collapses and with prices falling by 64%. However, aside from the fact that the market has picked up a little in recent days, a variety of macroeconomic indicators suggest that 2023 may bring more sustained rallies.
Not only is inflation easing in various countries and employment rising, but bond yields -- particularly those of US Treasuries -- suggest that interest rates will peak at below 5% this year, lower than some analysts have feared. This is very good news for speculative risk assets such as bitcoin and cryptocurrency, which may spend much of this year correcting the losses of its predecessor.
Explaining why bonds currently provide good news for risk-on investors, fixed-income manager Jeffrey Gundlach argued that they provide a more reliable indicator of future interest rates than hints and informal comments from Federal Reserve officials.
Speaking during a webcast on Tuesday, the DoubleLine Capital CIO said, "My 40-plus years of experience in finance strongly recommends that investors should look at what the market says over what the Fed says."
Right now, the market is saying that the Fed's base rate may not rise much higher than its current level, which is between 4.25% and 4.5%. This is because treasury yields are actually trading below the Fed’s official range, with even the two-year note ending slightly below 4.25% yesterday.
In other words, the market is not buying and selling bonds with higher rates because it doesn't, on average, believe that the Federal Reserve will actually raise its own rates. It sees no need to compete with rates of 5% or higher, because it doesn't believe the Fed's official rates will go higher this year.
The implication of this is that the US central bank may begin cutting rates again as 2023 progresses, something which will be bullish for risky assets such as cryptocurrencies. This is because lower rates make higher return assets more attractive to investors, partly because bonds won't be offering as high returns, and partly because lower rates signal an expanding money supply.
In turn, investors should expect rising cryptocurrency prices. Of course, this also depends on other macroeconomic factors, with the Ukraine war and rising inflation dragging down everything from bitcoin to tech stocks in 2022.
Fortunately, signs suggest that the picture may slowly be improving. Inflation in the United States has declined for two consecutive months, down to 7.1% in November from a peak of 9.1% in July. This has been helped by declining oil prices, with US crude oil falling to just over $73 last week, down from a 13-year high of $130 in March.
Declining prices weaken the case for higher interest rates, while contracting economic activity strengthens the case for lower rates. Contractions have been witnessed in numerous major economies in recent weeks, with the US services sector contracting for the first time in two and a half years in December.
So now that the Fed and other central banks worldwide have put the brakes on inflation growth, they may begin to reverse direction as 2023 matures, particularly if economic activity continues to slow. Reductions in GDP have already been witnessed in the UK and in China (in manufacturing), with other major nations predicting similar movements (e.g. Germany and France).
It therefore becomes very likely that central banks will begin acting to re-stimulate economic growth. Again, this implies lower interest rates and -- by extension -- an expanding money supply, with more money meaning more investment and speculation.
This includes investment in cryptocurrencies. Of course, it's hard to say by just how much digital currencies such as bitcoin will gain this year, but with many losing anything from 65% to 90% in 2022, the returns could be substantial.
Needless to say, this will take some time to happen. But with inflation declining and bond rates remaining low, it seems like the long-ish process of economic transition has just begun.
When the next bull market eventually arrives, it's likely that newer altcoins may benefit more than established cryptocurrencies such as bitcoin and ethereum. In particular, tokens currently holding their presales may be among the biggest gainers, given that they're beginning from such a small base.
Even with last year's bear market, some presale tokens witnessed massive gains after listing for the first time. For example, Tamadoge (TAMA) rose by as much as 1,800% compared to its presale price in October, while Lucky Block (LBLOCK) witnessed an increase as high as 6,000% compared to a sale price of $0.00015.
The three coins below are currently holding their respective token sales, with each boasting the kinds of fundamentals that should help them enjoy successful listings. This will especially be the case if they list during an upturn for the wider market.
One of the newest and most exciting projects in the cryptocurrency ecosystem, Meta Masters Guild is a mobile-focused gaming guild for the Web3 and play-to-earn sector. Based on the Ethereum network, its platform will create numerous blockchain-based games with playable NFTs, while it will pay out rewards in its native token MEMAG, which can also be staked and traded.
Begun at the end of last year, its presale currently has a price of 1 MEMAG for $0.007, although this will rise in the next stage of the sale, which begins in just over nine days. The sale is due to have seven stages in total, with the seventh stage setting a price of 1 MEMAG at $0.023.
The sale will have a supply of 350,000,000 MEMAG, which will raise roughly $4,970,000 if they're all sold. This equals 35% of MEMAG's total maximum supply of 1 billion, with 50% being vested for at least three years before it can be sold.
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Fight Out (FGHT) is an Ethereum-based platform that combines real-life workouts with Web3. In contrast to earlier M2E apps, it will track and reward a much wider range of workouts, including boxing, weightlifting and yoga, while also offering a range of in-app and IRL courses at its own branded gyms.
Its token sale opened in December and has already raised over $2.8 million, with 1 FGHT currently selling at $0.0166. The sale is due to end by Q2 2022, which is when it will list for the first time and when its app will launch.
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Running on BNB Chain, C+Charge (CCHG) is a peer-to-peer payment network for electric vehicle (EV) charging stations, beginning its presale in December. It has the overarching aim of using blockchain and crypto to widen access to carbon credits, with its native CCHG set to be used within its network by EV owners to pay to charge their vehicles.
In addition, C+Charge will also reward users with NFT-based carbon credits for charging their EVs at its stations, giving people an incentive to go green. It has also already signed partnershps with Flowcarbon and with Perfect Solutions Turkey, adding 20% of the EV chargers in Turkey to its network.
Given such early growth, it's another new platform in a strong position to have a successful 2023.
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