Bitcoin in 2023 — Are We Waiting for a New High?
A look back and future scenarios
2022 was a terrible year for the whole world, including the cryptocurrency market.
- The major cryptocurrencies Bitcoin and Ethereum lost 2\3 of their value
- Bitcoin volatility fell to the lowest point of 2020–2021
- The collapse of FTX and Luna significantly undermined confidence in the crypto industry
- Regulation will become more stringent
- Trust in exchanges has plummeted, leading to withdrawals from exchanges to cold wallets
- Binance’s dominance in trading volume is at its highest. Binance is a good exchange, but we do not see the strong monopolization specifically for the crypto market as a positive factor
- Everything led to a decrease in liquidity, prices, and volatility.
Everything is cyclical in the markets, which gives us hope.
Volatility tends to explode after a long stagnation. We saw this in both 2020 and 2021 on the eve of major bullish trends. In 2021 and 2022, many retail investors rushed into the market in anticipation of easy money, with many trading with leverage.
After a bloody 2022, it is unlikely they will continue to hold their positions. There is no conspiracy theory here, but beginners without risk management and a trading plan are more likely to lose money than make a profit. For every one person who got rich at the expense of shitecoin’s 10'000% growth, there are 10 who invested near the highs and have now lost most of their deposit.
The second positive factor is the low base effect. It is now much easier to buy Ether at 1'500 and Bitcoin at 19'000 than if they were three times more expensive. This can be a good entry point.
Turning sentiment. There are already a lot of publications from those who are disappointed with cryptocurrencies and do not expect them to rise to new highs. Well, common sense skepticism is necessary for sober analysis. However, mass decadence often provides a good entry point into an asset. Just as mass euphoria provides signals for shorting market positions.
In summary, despite the difficulties, it is very likely that we will see an increase in volatility and probable growth in cryptocurrencies in late 2023. We do not analyze the quality of the blockchain, the technological maturity of the projects, etc. We trade bots based on price behavior. And prices behave cyclically and tend to return to the mean.
Do we expect a new high for Bitcoin in 2023?
Probably not, many factors have to come together, not just in the crypto industry itself. The global economy is just one step away from a recession, the dollar exchange rate is rising. Also, do not forget that U.S. and Chinese tech stocks have also plummeted in 2022. It is likely that investors are more likely to buy cheaper companies that generate cash flow. Cryptocurrencies will be only one of the instruments in the portfolios of investors with low exposure.
Our verdict is moderate optimism.
Follow us, we’ll talk about crypto and automated trading. How do you create your own bot? How do you check if it works? How to do statistical analysis and predict results? We’ll be sure to cover that in the future.
