Bitcoin And Crypto: What To Expect In 2023 (BTC-USD)

“Up like a rocket, down like a rock” so the ever-repeating story of markets goes. Now it is not a surprise that traditional investors find the idea of cryptocurrency disgusting. The internet was hard enough to swallow and then there suddenly appeared crazy magic money that made no sense and produced bazillion percent profits for – in Scooby-Doo parlance – “those pesky kids.”

Any seasoned investor has been trained on the “South Sea Bubble,” John Law’s “Mississippi Bubble,” the “Tulip Mania;” everyone knows that they come horribly unstuck. Bitcoin (BTC-USD) is just the same.

They are right.

BUT…

The South Sea Bubble was created by the emergence of the London Stock Exchange, which hasn’t looked back since, and represents a key infrastructure piece of the global economy. John Law’s Bubble was the introduction of “fiat,” which has had a checkered history since, but is still money as we know it and was about the commercialisation of a fairly large proportion of the USA, which today is obviously an economic and political powerhouse. As for the Tulip Mania, tulips in Holland are still a billion-dollar industry. I bought some last week, and they still look good in the vase in my hall. There are more examples of bubbles and crashes that lead to vast value, none more so than the Dotcom boom and crash. Meanwhile exotic securitisation derivatives march on even though they nearly sunk the global economy in 2008.

So let’s not write off bubbles as manias that turn into something huge. Crypto will be no different.

However, no one really cares about the long term, they want to know what Bitcoin is going to do tomorrow.

The answer is, it will go up and down.

The real call is what it is going to do in 2023

Here is the chart:

So, this is the easiest way to speculate on what happens next:

The bullish news is that the volatility is gone. The bearish news is there is a pent-up wall of FTX contagion that has yet to break to the surface. The recent missive from Gemini about the DCG, Genesis, Grayscale “dynamic” highlights just one of the potential debacles that can only press down on the values of crypto.

The big bullish news is the upcoming “halvening,” which is when Bitcoin issuance halves. However, that isn’t until March 2024 and it might take until after that point to put upwards pressure on prices.

So, the outlook is bearish in 2023…but wait, it could go two ways:

1. BANG… up comes another FTX-like situation, down goes Bitcoin. Contagion rules and prices capitulate. That will be the bottom; a bottom that will see a purge of spicy CeFi platforms. Then, once a period of grief has elapsed, it will be time to accumulate.
2. CeFi platforms hang on in, pretending that the rules don’t apply to them or covering up or simply ploughing on regardless until the inevitable outcome is they fail, or the market turns and they calmly and covertly trade their way to a better place. In this case, the market will grind down until mid-2024 when the “halvening” kicks in. The trend should show where that ends up and it could be well under $10,000.

I still “like” $13,000, which has been my target for over a year now, but the price levels at the end of a bear market are highly uncertain.

What to do?

1. Self-custody. Keep your crypto in your own wallet; remember, not your keys, not your crypto. If you have to play on a CeFi platform don’t use it as a bank, and be able to run at a minute’s notice.
2. Park your funds in USCoin (USDC-USD), but keep an eye on all stablecoins as nothing is sacred in crypto.
3. Make sure the DeFi providers you use are actually “Decentralised” and not playing fast and loose with deposits in parallel. That is a tough job.
4. If you smell any spicy behavior bail out of whatever it is.
5. Prepare for re-entry so, come what may, you can get in or out when things kick off. Do not rely on a single provider of any kind of service.

Better still, just wait until you hear it’s all over for crypto forever, any fool could see it was all a scam, this time it really is dead-dead… Make sure it’s a mainstream, mean front pager. Then make sure prices look really very low, wait for a couple of weeks, and get buying.

I think we will get another leg down before Easter, then the call will be: is there another drop to $8,000? Until the purge of CeFi is complete the bottom won’t be in. Then it might be a simple case to buy Coinbase (COIN) at whatever price it trades at. However, in the end, loading up on Bitcoin, Ethereum (ETH-USD) or a coin like Polygon (MATIC-USD) will be the way to go for the big win.

… and then after it’s gone up like a rocket, remember it’s coming back down like a rock….again.

Editor’s Note: This article covers one or more microcap stocks. Please be aware of the risks associated with these stocks.