year 2023 bitcoin and started with better-than-expected performance for other cryptocurrencies. While many assets were traded in a narrow range, BTC rose 1.55% and ETH rose 4.5%.
According to market analysis by QCP Capital, there are a number of signs crypto investors should watch out for. Gold is currently showing a strong performance; Based on the Elliott wave theory, he also shared a forecast for the expected fifth wave of the USD rally.
According to Elliott wave theory, the fifth wave represents the last leg in the direction of the dominant trend. A resurgent USD could trigger a drop not only for gold but also for Bitcoin and crypto. As QCP Capital notes, it is not yet clear whether this will affect other alternative asset classes as well.
Currently, total liquidity in the market, as measured by the annual growth of the M2 money supply, has dropped to 0% for the first time in history. Based on the chart below, the firm commented, “Not to mention the liquidity within the crypto itself, which is an even smaller factor.”
7/ And overall liquidity, measured by M2 YoY growth, has shrunk to 0% for the first time in history! Not to mention the liquidity within crypto itself which is an even smaller factor of that pic.twitter.com/grwcAdPLn6
— QCP Capital (@QCPCapital) January 4, 2023
NEWS CONTINUES BELOW
What is the Price Target for Bitcoin and Ethereum?
However, Bitcoin and Ethereum, just like gold, goes on a sort of catch-up rally at the beginning of the year. Despite the rally, BTC is still trading in an extremely tight falling wedge, with $18,000 seen as the key breakout level to the upside, according to the firm.
In the medium term, $28,000 is becoming increasingly important as the head and shoulders neckline and the 61.8% fibonacci retracement level between the 2020 low of $3,858 and the 2021 high of $69,000.
Koinfinans.com As reported by QCP Capital, Ethereum is “more bullish than BTC,” but is trading in a consolidation pattern. Traders should follow the top of the $1,400 triangle for now, before targeting the key resistance zone between $1,700 and $2,000. On the downside, $1,000-1,100 would be a very good support.
Macro View for 2023
The key to whether 2023 will be the continuation of 2022 will be “macroeconomic developments”. QCP Capital believes that US inflation will fall significantly, but not enough to meet the Fed’s 2% target.
This will cause the Fed to delay rate cuts for as long as possible, as Jerome Powell has often stated that he doesn’t want to be the authoritative person to make the mistake of the 1970s-80s, when the “double-bottom inflation period” took place. The firm expects such a policy to result in a late relaxation.
We expect this to happen only in October-November this year, but we believe it is possible for the markets to bottom out earlier than that.
