The year 2023 has started well for the crypto industry, as all coins are making huge price gains across the board. The big question is, of course, whether this is a short-lived revival in a bear market or whether we can cautiously speak of a bull market. In any case, Mark Connors, the head of the research department of the Canadian asset manager 3iQ, is extremely positive.
Has the bull market started?
If it’s up to Connors, the bull market is on. In his most recent analysis on Friday, the analyst shares that his 3iQ sees the current rally as a trend reversal. “We view the current rally in the digital asset market as a trend reversal and NOT a bear market rally,” Connors said in Friday’s piece.
In the piece, he also draws attention to Solana (SOL), which experienced an 80 percent share price explosion from the start of the year. During the period November through December, the project suffered extremely badly due to the implosion of FTX.
Sam Bankman-Fried, the fallen CEO of the exchange platform, was known as a strong supporter of the project. With the loss of Bankman-Fried, confidence in Solana also fell. It has since recovered reasonably well. Connors also writes in the piece about the statements made by Federal Reserve employees, who are becoming less and less strict.
The Federal Reserve
When the Federal Reserve makes strict statements, we call it hawkish and vice versa we speak of dovish. According to Connors and his team, we see a trend within the US central bank towards increasingly dovish statements, which is good for the market. This means that we are moving closer and closer to the end of this cycle of rate hikes.
“The potential for a reduction in interest rate hikes and balance sheet contraction is a nod to a possible end to the sharp decline in the money supply,” said Connors. A sharp fall in the money supply is, of course, one way to reduce inflation. The less money there is in circulation, the lower the inflation rate. Unfortunately, this has also hit the financial markets quite a bit in the past year.