BitcoinBTC, ethereum and other major cryptocurrencies have rocketed higher in the first three months of 2023with some predicting the huge price rally could just be getting started.

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The bitcoin price, following a brutal 2022 crash, has added around 70% since early January as traders increasingly bet the Federal Reserve is close to declaring victory in its war on inflation or risk triggering hyperinflation.

Now, analysts at the world's largest asset manager BlackRockBLK have warned the market is wrong to bet the Fed is about to flip dovish, predicting higher interest rates are here to stay.

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"We think the Fed could only deliver the rate cuts priced in by markets if a more serious credit crunch took hold and caused an even deeper recession than we expect, the BlackRock strategists wrote in a note seen by Bloomberg.

The banking crisis that engulfed Silicon Valley Bank, Signature Bank and Silvergate before spreading to Europe is thought to have been partly caused by the Fed's rapid series of interest rate hikes, adding to expectations the Fed would be forced to lower rates in coming months. However, the banks have stabilized this week, fueling hope the problems are contained.

"That damage is now front and centercentral banks are finally forced to confront it," BlackRock analysts wrote. "We think this means they are set to enter the new phase of curbing inflation that weve been flagging. We see major central banks moving away from a whatever it takes approach, stopping their hikes and entering a more nuanced phase thats less about a relentless fight against inflation but still one where they cant cut rates."

The bitcoin, ethereum and wider crypto price boom so far this year has been powered by "continued confidence in an imminent Federal Reserve rate cut," Alex Kuptsikevich, FxPro senior market analyst, wrote in a note.

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Earlier this month, Fed chair Jerome Powell told Congress there is still a "long way to go" in reducing inflation that spiked to a 40-year high in 2022. Spending, hiring and consumer confidence have all held up better than some expected them to despite the Fed's hawkish stance.

"With consumer resilience again shining through, there are growing expectations that the Federal Reserve may hike interest rates again at the next meeting, but its still believed to be close to the summit of peak rates, particularly as banking lending is expected to tighten, causing a drag on the economy," Susannah Streeter, head of money and markets at broker Hargreaves Lansdown, wrote in an emailed note.

I am a journalist with significant experience covering technology, finance, economics, and business around the world. As the founding editor of Verdict.co.uk I reported on how technology is changing business, political trends, and the latest culture and lifestyle. I have covered the rise of bitcoin and cryptocurrency since 2012 and have charted its emergence as a niche technology into the greatest threat to the established financial system the world has ever seen and the most important new technology since the internet itself. I have worked and written for CityAM, the Financial Times, and the New Statesman, amongst others. Follow me on Twitter @billybambrough or email me on billyATbillybambrough.com.Disclosure: I occasionally hold some small amount of bitcoin and other cryptocurrencies.

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Crypto Price Alert: BlackRock Issues Stark Fed Warning After Huge Bitcoin And Ethereum Boom - Forbes