The holiday season is a time for many fun traditions. And none more so than the annual crypto commentators end of year predictions. It’s good to remember to revisit these as in one year’s time almost all will be comically wrong. So, with 2023 just around the corner, here are some “safe” predictions for the next year in the digital economy space.
If 2022 was the year that cryptocurrencies collapsed, the crypto market will finally bottom in the first quarter of 2023. Bitcoin will be first. Though some indicators suggest that this has already happened, there are many that do not. Bitcoin will often bounce around a level of up to 65-75% drawdown from the All Time High (ALT) before witnessing a final capitulation to the market cycle bottom. Currently, Bitcoin is around 75% down from the ALT but has not yet retreated to a level witnessed in previous cycles. While no cycle is the same as any previous one, percentage drawdown has been a reliable indicator of when things are on the turn.
With the final breakdown, a Bitcoin price of 10-12k is possible.
Only when the market turns around will you see a sustained move to the upside. Unfortunately, this is unlikely to happen any time soon. The broader macro environment does not indicate any significant shifts to come that will benefit crypto. Inflation will remain high. An era of high inflation, high interest, and low growth is here for the foreseeable future. While the debate will be whether economies have entered ‘stagflation’ or not, for crypto investors and traders that’s academic.
What Can We Expect?
The U.S. Federal Reserve has made it abundantly clear that no major ‘pivot’ is coming soon, and the economy will see high-interest rates throughout 2023. This means markets will remain risk-off, and that is bad for crypto. Apart from the usual positive pumps in April, November – December, the market is going to be relatively flat. Perhaps, after the drama of 2022, we could all do with time to catch our breath?
Under the cover of consumer protection regulation will be rolled out across the globe, as national governments front-run the trial and introduction of their own Central Bank Digital Currencies. The crypto industry has gifted regulators with all the excuses that they need to introduce tougher regulatory environments. But regulation should not necessarily evoke fear. If crypto is honest, some of it is needed and long overdue. As different agencies in the U.S. debate who should regulate crypto critical decisions will probably be left languishing in the long grass anyway. And on the flip side, just a little clarity would give institutional investors the confidence to allocate to the sector.
To finish on one prediction that you can bet the house on and that is will not be seeing any new All-Time High in 2023. In the next 6-12 months, fixed-income assets will be the best play, and crypto is not that. Yet crypto is volatile and there is always an opportunity to make a trade and make a gain. Just DYOR (do your own research first).
P.s. If you know of any commentator that predicted the majority of 2022 correctly then follow them, they will make you rich!
Personal Note From MEXC Team
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