With just a few hours to close the year 2022, the most common thing is to take stock of everything that happened during this period. The truth is that from the point of view of emotions it has been a year that has not disappointed. The digital asset ecosystem has suffered severe shocks, and despite the worst forecasts, it continues to be there, and it does so with strong resilience
In any other situation and in any other context, the market has to have completely collapsed, and this has not been the case. The market has experienced similar falls and in a context of news not as negative as this one
Resurgence like the Phoenix Bird?
This raises several questions regarding the immediate future. We have 2023 just around the corner, and it does not come with less force than the 2022 that we are closing
If you follow my posts and interruptions on social media, you already know that I am very little fond of forecasts, especially when they want to be very specific, which is why they are basically never right.
The possible combinations of unforeseen events are so enormous that any forecast does not stop being a toast to the sun, but this time it allowed me to take the crystal ball out of the attic and try it.
The question that most investors ask is what will happen in 2023 with crypto assets. The year 2022 closes with a clear bearish bias. In fact, if we approach the market with a long-term view, we will realize that this bias has been present since the first minute of 2022 and we have not abandoned it at any time. The process already begins in the last quarter of 2021 after marking the ATH
It can be seen in the daily chart how the trend has persisted during this 2022, although we can have a window of hope in this last quarter, where the intensity of the downward movement has decreased significantly, reaching the current point where we hardly have movement.
This has allowed the price to pierce the bearish trend coming from the ATH and put the price in a more neutral position. This in principle makes it easier for the market to experience a bullish turn.
We will see the market’s ability to reverse the current situation, and above all the emotional dynamics that will occur, since in this context, the emotions of investors are the most important after the events experienced in 2022.
Ethereum is not so bullish
Applying this same approach, the diagnosis of ETH is not as optimistic as with BTC, mainly because we have not yet experienced the break of that bearish guideline on the hourly chart.
We will have to wait a little longer to confirm the figure. But it is true that the asset draws us a clear area of land
Strong declines in the rest of the market
The rest of the assets show heavy losses during this 2022, which have occurred constantly, especially in the first part of the year. Curiously, the great disaster caused by the FTX case appears in our minds, but the significant fall of this 2022 occurs in the month of April, touching lows in the month of June.
Those lows have been pierced with the volatility caused by FTX, but in a move with much less impact than the previous one.
You have to look closely at the three graphs to appreciate an important common denominator. We also have the data that provides us with the indicators that can be descriptive of the situation.
Market situation as of December 2022
At this time, therefore, we appreciate several significant details:
- The significant drop in the market occurred in the first half of the year
- Important facts and news have accentuated this fall in the second part of 2022, but without reaching the intensity of the previous movement. In fact, we could perfectly read that these facts can be described as a black swan. And that if it had not occurred, the market dynamics would surely have responded to the patterns we had seen in previous cycles (later we will talk about halvings and the stock-to-flow model).
- The market is currently at historically low volume levels as a whole. We can see this, for example, with aggregated market data as we do with our Crypto500 Index, our reference index for the crypto market.
- The macro situation of the economy opens a new scenario. This 2022 also gives us a great lesson, showing us how disconnection from the traditional financial system is not so simple and easy. A change of bias in monetary policy has been enough to see how the crypto-asset market has been pending and has reacted to the decisions and policies applied by the Federal Reserve
Therefore, a large part of the investor muscle is out of the market at the moment, mostly more concerned with what happens in the rest of its portfolio, than with the part invested in digital assets.
Let’s get the crystal ball…
Well then… what strategic approach should we follow for this 2023?
Given an environment so plagued with uncertainties, I think we have to be cautious and develop our strategy very well, which, as always, will be conditioned by our investment horizon:
- Short-term investment: Trading operations taking advantage of the market trend, be it bullish or bearish.
- Long-term investment: Looking for assets with great value whose current price is much lower.
Short term trading
Regarding the short-term strategy or trading strategy, I would mainly opt for prudence and minimize our presence in the market. Quick operations before important movements of the market fleeing from these moments of indecision and lack of volume.
In this sense, monitoring market activity is going to be key. Without money coming in, the market will hardly move and our risk of loss increases considerably.
Attention to movements that suppose the breaking of longer-term trends
We will have to work a lot with the charts to identify the price zones in which we are going to carry out our operations, mainly to work against the movement, such as with Bitcoin in the area of 18,300 USD.
This is going to be a particularly interesting area.
long term operational
If we want to hold assets, unquestionably the current price levels are ideal to start buying, but it does not necessarily mean that we go shopping right now
• We will wait for technical levels to consolidate in longer-term charts (we think again of USD 18,300 of btc)
• Special attention to BTC dominance data and its historical evolution
• Development of partial and progressive purchasing strategies as the market strengthens.
As we always say, each trader is different and we cannot develop a valid strategy for everyone, but we do believe that if we are believers in digital assets and their disruptive power, we are undoubtedly facing a historic opportunity to compose a portfolio that gives us many joys in the future
We think that 2023 will start difficult and complicated, especially in its first quarter, to pass or consolidate the current phase of market laterality. In the second part of the year, with news about regulation that we believe is favorable, a progressive increase in activity, and the proximity of the BTC halving in 2024, I think we will see a clear upward turn in the market.
That is as long as there is not another black swan to spread its wings… but still, let me be optimistic and think that the market is beginning to be above this type of situation. Do not underestimate the powerful incentive that cases such as FTX represent, which will surely force the ecosystem to create projects with other dynamics and based on fairer, more equitable, transparent and secure principles.
And that is the recipe for the adoption of this technology…..