A new year is here and hopefully we can all breathe for a minute after a difficult 2022 for most. Well done if you’re still around, seriously. You would be shocked if there was an official number of market participants who have capitulated this year. Bear markets are a necessary process and the majority of us know they are coming but that doesn’t always make it any easier. Especially when a tier 1 exchange rugs their customers but yeah, we won’t get into that…
In this article I don’t want to focus solely on price predictions because they on their own without any justification or reasoning, are pretty worthless. I want to discuss the reasons and factors that I am taking into consideration behind these predictions. This will include the conditions I expect us traders to have to deal with over the next 12 months, crypto’s first recession and I’ll touch on what I expect from altcoins and NFT’s, but first let’s discuss the comparison of 2023 to 2019.
Could 2023 be a repeat of 2019?
Now this is the first thought in my mind when we talk about the typical four year crypto cycles. We seen many similarities between 2018 and 2022 with the ‘down only’ culture. Bitcoin was down 72% over the year of 2018 compared to -65% during 2022 and many altcoins have been left decimated, again.
Moving into 2019 and it was a tale of two halves. We seen a pretty decent rally during Q1&Q2 but the tail end of the year wasn’t so great. A slow bleed and plenty of sideways which ultimately killed all immediate hope of the bull run returning and seeing previous all time highs breached.
However, a factor that crosses my mind repeatedly is how different the macro conditions are right now. We see that term used so often these days but it does make an impact on all global markets which for better or worse, includes crypto. I’ll get into this in more detail shortly.
As Mark Twain once said, “history doesn’t repeat itself, but it does rhyme” and this is what I tell myself frequently when putting my plan together as a long term investor. Just because we bottomed in December 2018 doesn’t mean we have to bottom in November 2022. There’s a strong case for it after the FTX fiasco, but it’s not a sure thing. Nothing ever is. If it was that predictable and so certain, everyone would be rich.
Sideways Price Action…
One thing that I am confident in saying is the worst is behind us at this point when it comes to numbers going down violently. We’ve seen Bitcoin fall 77% from its peak and many altcoins down 90–99%. Of course they can fall lower, but the worst is behind us. I do actually think that this year might be painful for different reasons. This year may test our patience and frustrate people as their portfolio’s don’t really move much. Sometimes a portfolio going down is easier to cope with than a stagnant portfolio. At least you feel something!
When it comes to trading, the sideways price action isn’t always favourable. Some traders may thrive, but realistically it will be few and far between. During these ranging, choppy conditions the hardest thing for most traders would be sitting on their hands and doing nothing for the most part. It truly is an edge when a trader can identify when market conditions meet their trading style and rules.
Cryptocurrency’s First Recession.
It’s predicted by many analysts that in 2023 we will ‘officially’ see a recession with GDP making two consecutive downward quarters. Crypto has never seen an official recession before. Many of you will be aware that the reason Bitcoin was created was due to what went down back in 2008.
So how can this potentially impact 2023 and them typical four year cycles? We have to consider the possibility that it might cause a little more pain than usual. Maybe the official news of heading into a recession or continuously bad inflation numbers slowly take their toll on all markets including crypto. These examples could potentially cause us to head lower later in the cycle compared to last time around. However, it could be that we don’t head lower and sideways price action lasts even longer than it did in 2019.
Markets are made up of supply and demand. When demand outweighs supply, we see price rise. When supply outweighs demand, we see price decrease. With a recession lurking and people becoming cautious of their spending, it makes you wonder where short term demand will come from. We also have to consider other factors going on in the world such as war and the European energy crisis. Does the average retail investor have any spare cash lying around right now to buy magic internet coins?
Now the counter argument to this is that smart money, AKA whales, AKA institutions, have finally got the opportunity that they have been waiting for. Finally they can accumulate at cheap prices over an extended period of time when the average retail investor is not in the best position to buy. Keep in mind that smart money won’t market buy and pump the price 5x in a week. They are more likely to be buying OTC and will slowly accumulate in sideways conditions. This adds to the argument of why I feel that ranging conditions is likely for the most part of 2023 rather than further nuking.
How does the year pan out for Bitcoin?
Now this is just my opinion, I will still be playing things as I see them and sticking to my original plan. I will be a buyer throughout the year and the lower we go, the better for my average entries.
I think we see a bit more pain during the first quarter. Nothing like 2022, but maybe just a squeeze lower to really hurt people who are already down and out. I think something like an official statement of a recession could create somewhat of a black swan event where we see a nasty weekly wick due to mass fear across retail investors.
Then as we move towards the middle of the year, things will plateau and bore people as we see ranging price action. Eventually, we get a decent rally worth talking about towards the end of the year. People will start to get excited that Bitcoin is back above $25,000 for the first time in over 12 months and then we head back lower, causing further pain for those who recently FOMO’d back in. Finally, 2024 comes along and we all start talking about the holy Bitcoin halving.
What happens to Altcoins and NFT’s?
This is where I expect many similarities to 2019. Not necessarily with NFT’s of course because they wasn’t really a thing back then, but I think they will follow a similar path to altcoins when it comes to narratives and pumps that we can take advantage of.
In 2019 we seen certain coins and narratives pump. When it’s hard to make money, everybody jumps on the same ship which causes chaos in either one specific asset or a category of assets. The Binance IEO phase in 2019 created some great short term opportunities with significant multipliers.
Funnily enough, just this week we’ve seen the BONK airdrop for NFT buyers on Solana. This played it’s part in Solana seeing a decent rally and also printed huge multipliers for the meme coin itself. Without getting into the details too much, we’ve seen our first big money making opportunity of 2023 already with huge returns for individuals holding this meme coin which we haven’t seen for a while.
I recently wrote an article all about narratives which you can find here. It may help you in your quest to finding the next big plays during 2023.
Predictions (for some fun)
BTC
April 1st: $15,800
July 1st: $17,200
October 1st: $26,700
January 1st: $22,000
Yearly high: $28,500
Yearly low: $12,700
Conclusion
These are just my thoughts. I’ll look back at this in a year and it will be interesting to see how things played out. Of course you can go into much more depth on all of the above but at the end of the day, everyone is making educated guesses. The most important thing is that you position yourself appropriately and prepare for all outcomes.
Those who read this hoping that I would say we are heading into a new bull run next week, I’m sorry to disappoint but I just can’t see it. Of course, I could be wrong but I just can’t put together a solid argument to why this would be the case when taking in all of the above information.
As you can probably tell from my expectations above, I do believe that 2023 will be the year of accumulation. Dollar Cost Averaging throughout the year will be the most simple yet effective strategy you can take on board to best prepare yourself before crypto picks up momentum again during the next bull run.
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Hopefully this was helpful! Please let me know on Twitter if it was and I’ll share more articles like this. Also, feel free to follow on Medium for more content and again on Twitter and Telegram where I will share future article releases.
Cheers, Posty.
*This article should not be considered as financial advice and has been written for educational purposes only.*
