Korbit Research Center "Crypto Winter Will End Within This Year"

Market Recovery in Q4 Predicted Based on Market Consensus
"Recovery Timing Can Be Known by Predicting the Shift in Tightening Monetary Policy... Next 6 Months Are Crucial"

[Asia Economy Reporter Myunghwan Lee] The Korbit Research Center announced on the 14th that it has published a report titled "Crypto Winter 2022, Until When?" analyzing the recovery factors and timing of the recently started crypto winter.

This report compares the crypto winter that began in earnest in June with past crypto winters and examines various factors necessary for recovery. Finally, it forecasts the end of the crypto winter based on market expectations.

The Korbit Research Center defines crypto winter as an undervalued period when the 'MVRV Z' score is below 0.1. The MVRV Z is a metric used to determine whether a virtual asset is overvalued or undervalued based on its fair value. It is calculated by subtracting the fair value from the market capitalization of the virtual asset and dividing by the total standard deviation of the market capitalization. Based on this, the Korbit Research Center analyzed that this year's crypto winter started on June 13. According to the MVRV Z score, there have been three crypto winters so far, and the fourth winter is currently underway.

Jung Seok-moon, head of the Korbit Research Center, judged that the market recovery period from this crypto winter will be in the fourth quarter of this year.

Director Jung explained that the causes of the first and second crypto winters were internal factors within the virtual asset market, such as the Mt. Gox hacking incident. In contrast, this crypto winter was triggered by the U.S. Federal Reserve's (Fed) tightening monetary policy, making it similar to the third crypto winter experienced from late 2018 to early 2019. Therefore, predicting the recovery timing should prioritize forecasting when the Fed's tightening monetary policy stance will change.

Director Jung forecasted that the Fed's tightening monetary policy will ease in the fourth quarter of this year based on four indicators: ▲Fed's benchmark interest rate ▲inflation rate ▲non-farm payrolls ▲ISM manufacturing index. Specifically, the Fed's benchmark interest rate is expected to peak in the fourth quarter and the upward trend will slow down, while the inflation rate will gradually ease from the second quarter of this year.

Non-farm payrolls and the ISM manufacturing index are also expected to show a gradual decline from the second half of this year through next year, indicating a delayed recovery in the employment market and manufacturing economic activities. This outlook is analyzed to act as a factor slowing the Fed's interest rate hikes.

Director Jung stated, "The next six months will be a very important period for investors," and added, "I hope this report will be of some help to investors in making their own decisions."

This content was produced with the assistance of AI translation services.