Cryptocurrencies entered the new year by bandaging their wounds after the 2022 massacre. The overall global crypto market cap has increased by 5% since January 1 to reach $871 billion. But it was still above 57% by this time last year. Well-known names in the market share their cryptocurrency predictions.
“We do not expect ATHs in 2023 in the cryptocurrency market”
Bitcoin itself has increased by 4.3% since the beginning of 2023. However, it is stuck in a tight range between $16,500 and $17,300. The world’s largest cryptocurrency has been eerily suppressed as its 7-day volatility plummeted to levels not seen since October 2018, according to Refinitiv Eikon data. Vetle Lunde, senior analyst at Arcane Research, shared:
We do not expect prices to approach all-time highs in 2023. So it will be a year that requires patience. These periods of low volatility rarely last long. Moreover, periods of volatility compression were followed by sharp movements even in previously stagnant markets.
According to CryptoCompare data, cryptocurrency spot trading volumes remain similarly muted after falling nearly 48% month-on-month in December to $544 billion, the lowest level since December 2019. According to Arcane Research, while lower trading volumes were common at the start of the year, crypto market apathy has been exacerbated by a ‘general outflow’ of active individual investors.
“The base we created under Bitcoin encouraged me”
However, for some market players, the suppressed voices after the Bitcoin bloodbath of 2022 are pretty good. Callie Cox, investment analyst at investment platform eToro, comments:
The base we created under Bitcoin encouraged me. This shows that there is a lot of demand at the $16,000 and $17,000 levels.
Marcus Sotiriou, an analyst at digital asset broker GlobalBlock, points to the tightening of Bollinger bands, a technical indicator that tracks price and volatility on Bitcoin charts. The bands are at their tightest since July 2020, and such tightening has historically preceded aggressive upward moves for Bitcoin.
Additionally, funding rates for perpetual Bitcoin futures have been positive since Dec. 19, according to data from Coinglass. This means that traders are betting that prices will rise and they will pay to keep their long positions open.
“Macro backdrop is still bearish for crypto”
On the other hand, cryptocurrencies are at the mercy of macroeconomic headwinds as concerns revolve around a slowing global economy. GlobalBlock’s Sotiriou comments:
The weaker economic outlook means people have less disposable income to invest in things they see as risky, like crypto.
Dalvir Mandara, quantitative researcher at MacroHive, says that economic uncertainty can make investors rush for the security of the US dollar, which tends to be inversely proportional to Bitcoin. “The macro backdrop is still bearish for crypto,” Mandara adds.
Pollyanna look at the crypto money market!
Meanwhile, there are those who think that the recession and economic recession will benefit crypto. One of them is Sergey Nazarov, co-founder of Chainlink. According to Nazarov, who is a guest on CNBC, the rise in the market came after cheap money was distributed and interest rates were kept high for a long time. He notes that the crypto market is following big tech companies and is rising. From here, he expects it to be this way again. In this regard, he makes the following statement:
Crypto, too, will eventually attract the attention of big tech companies. Now we have to accept that cryptocurrencies are an instrument against inflation… Therefore, when there is cheap money, cryptocurrencies will attract investment again. We did not fully see the collapses in the global financial market. In contrast, things were not bad in crypto last year. I think we’ll see those levels again.
“Cryptocurrency market is pretty clean right now”
In a recent interview with CNBC, Galaxy Digital CEO Mike Novogratz says the outlook for crypto is neither great nor terrible. However, there are some issues with Gemini and Genesis that could pose challenges for the cryptocurrency market in early 2023. “This isn’t going to be great,” says Novogratz.
cryptocoin.com As we reported, Gemini co-founder Cameron Winklevoss recently wrote a stern letter demanding and blaming the dismissal of Digital Currency Group CEO Barry Silbert. Like other crypto companies, Galaxy Digital has been hit hard by the bear market. Novogratz states that his company is actively investing in infrastructure to weather the crypto crisis, from buying a mining facility in Texas to buying a stake in Israel-based firm GK8.
Legendary investor praises Bitcoin
The cryptocurrency market has started to return to the green zone led by Bitcoin. With the effect of this, the leading crypto’s voice supporters are not missing. One of them is former Amazon investor Bill Miller. Miller in particular believes that Bitcoin is ‘dramatically different’ from organizations like FTX and Celsius Network, whose failure has driven many potential investors away from the crypto space. Legendary investor says:
The collapse of FTX, a centralized entity like Celsius, and I think it’s crucial to understand that Bitcoin is significantly different from that.
Also, Miller points out that when traditional markets struggle for liquidity during the pandemic, the Federal Reserve needs to step up and throw a lifeline at them. However, Bitcoin highlights that it is struggling on its own. In this regard, he makes the following statement:
The Fed had to come in and clean up these markets by injecting massive amounts of liquidity. Bitcoin is trading 24/7/365. We have not heard such a hiccup from the Bitcoin market.
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