ALBAWABA - The crypto markets experienced shocking setbacks in 2022, ending the year on a grim note as many investors lost money when prices dropped sharply, providing little to no hope of recovery in 2023.
But there are some signs that the markets are recovering in early 2023. In the past few weeks, cryptocurrency prices have rallied slightly. Some popular cryptocurrencies are also seeing major developments that could help boost the market.
Nonetheless, the long-term viability of the bullish altcoin run is doubtful, especially given that the underlying trend remains bearish. It's difficult to pinpoint the fundamental driver of this bull run, and Bitcoin's price is currently trading below its resistance zone of $18,200 to $19,000. As a result, the uptrend is likely to fade as buyers become exhausted.
With 2022 behind us, some investors are still looking at the crypto market with a dark lens.
“In my opinion as an experienced trader who made and lost millions of dollars in my 8 years of trading career, 2023 will be similar to 2019, as we will see a range market; which means we will not see new all-time highs at all,” veteran crypto trader Yasser Tarawneh told Albawaba.
“If we study 2019 charts, we will see bitcoin goes to 14k then dumping back to the bottom again which was the 4K territory," he said. "Based on that data I see bitcoin touching 30k then dumping back to the bottom which could be in the 9-12k territory.”
But Mohammed Masri, COO of crypto asset trading solution AYMbot, countered. “Last year witnessed the greatest unraveling of the crypto market that I’d ever experienced at least, and sadly the effects were felt by many investors who went from ‘FOMO’ to ‘fear of not getting out’ in a remarkably quick succession of events,” Masri told Albawaba.
“I’m not adding my voice to what seems to be the ‘expert consensus’ regarding the outlook on 2023 thus far, maybe I’m more optimistic by nature, but then again I have skin in the game," he added.
Masri speculated: "I don’t think 2023 is going to follow the same pattern, in fact, the start of the year is showing positive signs of an end to the madness already with the deeper dives into the scandals of yesteryear showing positive turns for the recovery of investor assets that were thought to have been lost and the markets showing signs of renewed investor confidence."
If 2022 was any indication of what the crypto market might offer investors in the future, it proved to be extremely difficult to predict. “There are a great number of factors that will influence how the markets of 2023 shape out. The high inflation and Fed interest rate hikes had given both stock and crypto markets a one-two punch. Risk assets like stocks and crypto suffer when interest rates rise. And it’s quite early in the year to be certain,” Masri pointed out.
The global crypto market capitalization has dropped by more than 60 percent year to date, from $2.2 trillion to around $797 billion. During the same time period, the two largest cryptocurrencies by market cap, BTC and ETH, fell by 64 percent and 67 percent, respectively, with the alt market also falling.
“I believe during this year we will see a bottom of bitcoin at 9-12k which will make people lose interest in bitcoin and crypto as a whole,” said Tarawneh, the veteran crypto trader.
“Once the fed pause raising interest we will see a recovery in the markets because that was the main macroeconomic event that brought the bear markets,” he added.
What looks clear is that as the market matures - and confidence returns - there should be a positive shift; therefore, it would be no surprise if risk-taking investors moved earlier in the year rather than later.
In the medium term, it is also doubtful that the macroeconomic environment will shift dramatically. The 'crypto winter' will last at least a little bit. yet to be determined.
“If history is any indication, at least, to be considered when measuring the potential outlook on the future, then we ought to expect 2023 to mark the start of a new bull-run in the crypto-asset industry on the whole, according to Masri.
"The market cycle trend has been consistent since the year 2010, and the cycle of 2019-2022 has hopefully neared its end and the markets will return to positive volatility soon, in my opinion definitely before the end of 2023,” he added.
Many institutions are wary of investing in decentralized distributed ledger technologies since regulation will become a hot topic around the end of 2022 and there will be ambiguity surrounding it. The concept of "permitted DeFi" might possibly offer the remedy to ease institutions' regulatory burdens.
“On the market-end, we firmly believe that this year will witness better conditions that the abysmal markets we had witnessed throughout 2022, especially as major players are now wise to the fact that they need to shore up their compliance and transparency in order to avoid FTX-esque implosions," Masri argued.
He maintained that regulators are stepping up their efforts to put in place "protections to investors, and the ever increasing institutional interests and funds entering the crypto-asset space, a very positive trend that shows no sign of slowing whatsoever.”
It's uncertain what 2023 holds for the crypto space, but it will be interesting. The DeFi and blockchain-based games may gain mainstream acceptance. The year will provide answers to many important questions, so it's worth following the development.
Disclaimer: The Cryptocurrency market is considered highly speculative, risky, and largely unregulated. Anyone mulling investing in it, should be aware there's a risk of losing their entire investment.
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