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Cryptocurrency in 2023: Is BTC dead?

By Paul Reid

09 January 2023

Is the crypto-space stuck in a never-ending winter, or will it resurrect? Investors are running from exchanges in fear of insolvency or hacking, and the BTC charts show no signs of revival.

Former UK Prime Minister Boris Johnson and several other high profile names have started traveling the world promoting crypto technology, but the unlikely ambassadors haven’t managed to stir interest yet. Should BTC and altcoins be a part of your trading portfolio in 2023?

Reasons why crypto isn’t dead

Despite all the pessimism, there are still plenty of reasons to be hopeful about cryptocurrency. Here are just a few:

  • The underlying technology is sound.

  • Big business continues to embrace cryptocurrency payment solutions.

  • Regulation is slowly but surely coming to the crypto space.

  • Institutional investors are getting involved in the market.

These combined factors suggest that cryptocurrency is here to stay, so don't be surprised if the market starts to grow, despite the negative headlines you’ve heard.

Having said that, now might not be the best time to “go long” on crypto—not yet.

What to Expect from the Crypto Market in 2023

Several Tier-1 news broadcasters believe crypto is affected by Federal Reserve interest rates, and the Fed typically stops raising rates in Q1. The first quarter of 2023 may see BTC fall as low as 10K. Altcoins may follow with a 60% to 80% decline during that digital downturn. 

Another justification for 10K also comes from those who claim a theoretical correlation between the stock market and the crypto space. Officially, Bitcoin is an uncorrelated asset, but according to data from Singaporean bank DBS, Bitcoin’s correlation to the stock market exists and continues to increase. The stock market has not yet hit bottom, and many are banking on a crypto decline if/when Wall Street falters.

If the traditional and crypto market correlation strengthens over 2023, it could be an early indication that institutional investors are already in the crypto space.

Another factor to consider is general sentiment. The BTC price is sensitive right now due to reduced trading volume, and could easily flash crash if we see more mining bans, expiring exchanges, and hacking headlines.

But 10K is not the end of crypto. There are many reasons why crypto will fall in Q1, but a 10K benchmark might appear to be a “buy low signal” for traders, which could ignite a rally, despite lacking an underlying reason. Moreover, there are future implications that could support a revival in 2023.

Tomorrow’s technology today

In the tech world, the decentralized finance (DeFi) sector has exploded in popularity over the past few years, and for good reason. DeFi supports decentralized applications for people to use without relying on a third party.

DeFi, the underlining technology behind Ethereum and most other legit coins, offers incredible potential for growth and evolution. In fact, ETH developers plan to implement a new Ethereum Improvement Proposal (EIP 484) in 2023, which will be able to process thousands of Transactions Per Second (TPS). Such an increase will put them on par with Visa.

Basically, DeFi protocols are a direct competitor to today’s traditional financial systems, supporting trading, borrowing, lending, and saving. Institutional adoption of DeFi is inevitable at this point. Expect to see a lot of innovation and growth in the DeFi space in 2023.

2023: the year of crypto regulations

Governments around the world are still trying to figure out how to deal with cryptocurrencies. A lack of regulation is one of the biggest discouragers for institutional investors.

If the crypto industry gets regulated, we could soon see an influx of banks and hedge funds joining the billionaire privateers. As more institutional investors enter the market, we can expect to see more price stability and growth.

While many of the altcoins won’t survive regulatory scrutiny, there are some that will persist, and they will enjoy the new wave of interest from retail traders and institutional investors.

Conclusion

For now, there’s no reason to either buy or sell crypto. The information above suggests another epic fall for all coins, followed by a long and legitimate adoption of the technology in the months and years that follow.

Selling BTC in anticipation of a coming dip presents problems, especially if you like to be liberal with leverage. If you simply must trade crypto in Q1, consider setting a Sell Stop order to activate if a downtrend begins. Exness Gap protection will get the best price possible in the case of an epic crash, but that entry point won’t be easy to identify. 

Anything below $16,000 could appear on the chart to be the beginnings of a vigorous downturn, but technical analysis shouldn’t be overlooked. Follow crypto news daily and look for fundamental signals, and remember that Bitcoin has a tendency to surprise everyone.

We at the Exness blog will also be on the lookout for telltale signs, so favorite our homepage and check in with us regularly for insights.

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