Predictions on Bitcoin ad the crypto industry for 2023 - With a pinch of salt

ChainLogAnalyst on Twitter

Here are some interesting predictions on Bitcoin and the crypto industry for 2023, based on data, the macro situation, internal crises in the crypto sector and emerging trends

Everyone is asking but no one has the answer: what are the predictions for Bitcoin in 2023? Let's try to answer without playing guessing games...

BTC Analysis and Predictions: Introduction

What are Bitcoin's predictions for this 2023? In which direction will the most famous cryptocurrency go? When will the bull come back?

In the following study we would like to try to find an answer to these questions.

No, unfortunately we have not equipped ourselves with the crystal ball and we have not even developed the gift of foresight. We will therefore not make actual predictions on the price of BTC, also because we know that they would not be absolutely reliable.

What we can offer, and what we are going to do, is a prediction on the possible scenario considering the current situation. Therefore, we will focus on both the fundamentals and the technical parameters, reasoning on the most probable (but not certain) outcome.

We will start with an overview dedicated to where we are today. A brief and simple technical analysis will be followed by a study of the fundamentals, also taking into consideration the miners chapter.

Then comes the fun part: the Bitcoin forecast for 2023, based on previous observations.

In order not to leave anything to chance, we will then take a look at the correlation between BTC and traditional markets, predicting their future behavior.

While we cannot see what will happen, careful study can help us understand what the most likely scenario will be. Investing is also this: putting ourselves in a position to operate according to what is most likely to happen.

In order to be able to assess future scenarios, we need to know and understand the current picture.

In this section we will deal with this, distinguishing three main areas of interest:

Analysis of some technical parameters.

Analysis of Bitcoin and BTC, therefore focused on fundamental aspects.

Miners situation, kept separate from the rest given the delicacy of the topic.

In this way we will have a snapshot from which to develop a reasoning projected forward in time.

Technical analysis of bitcoin

Let's first evaluate the performance of bitcoin in 2022.

Our favorite coin ended the year with a bad -65%. For comparison, BNB is down -54% and ETH -69%. The S&P 500 index instead collected -19%.

Since 2011, this vintage is second only to 2018 in terms of impairment.

We know the factors that triggered the bear market well:

Expansive monetary policies, created to stimulate the economy during the pandemic. These have had as an obvious side effect the high inflation with which we find ourselves living today.

Consequence of the previous point, the restrictive monetary policies, aimed at halting the increase in prices. However, the increase in interest rates has an adverse effect: it damages investments.

War in Ukraine and international tensions.

Energy crisis, due to both the conflict and the consequences of COVID-19.

Material crisis, mainly caused by the inability to adapt supply to a demand that has returned to pre-pandemic levels.

We could summarize this non-exhaustive list in a few words: the bear market is due to an incredible combination of macroeconomic, financial and physiological elements.

Specifically for cryptocurrencies we find additional factors such as the collapse of Terra and some CeFi realities. These are events that have contributed to exacerbate an already complex situation.

The bearish scenario has affected all assets, from stocks to cryptocurrencies. The latter are more sensitive and subject to massive ups and downs, as we all know by now.

Returning to bitcoin, we can say that those who entered the bull market did not get the deal of their life, at least for the moment. In fact, 2022 is one of those years in which the market selects and eliminates anyone who is not at all prepared to support a change of course.

Shifting the focus to the present, let's take a look at the TradingView BTC chart, one of the best technical analysis tools out there.

Last year we witnessed a continuous decline in the price, interspersed with positive secondary trends and lateralisations.

Over time, the leg downs have been decreasing in amplitude. The bearish trend has therefore slowed down but this absolutely does not mean that it is over.

BITCOIN PREDICTIONS 2023

A comparison with past drawdowns would seem to confirm the last statement. This graph, elaborated by Arcane Research with TradingView source, illustrates how we could have arrived (almost?) at the end of the descent. We repeat: these are observations that have no certainty.

As for the volumes, another fundamental parameter to take into consideration, we don't have much to say: except for sporadic episodes, they confirm the "flatness" in which we find ourselves at the moment.

BTC’s ANALYSIS

Let's exclude the value and reflect on everything else… how is Bitcoin doing?

Considering the year that has just ended, all in all the conditions are quite good. Indeed, let's say that there have even been improvements.

First of all, the interest is still alive both among users and in institutional and corporate environments. BTC remains the most desired cryptocurrency and to which a more or less high intrinsic value is assigned. Of course, many still do not think so, it is inevitable.

We are in a moment in which bitcoin is increasingly known. Even the person who is not technological or passionate about economics and finance has at least heard of him.

Institutional investors are getting closer and closer to the asset, either to offer new products to their customers or to operate directly on them for speculative purposes.

By now BTC is consolidating its role as a store of value. In fact, those who believe in the technology behind it and recognize its potential ignore market variations and look far ahead. This consideration has led investors of various kinds to invest large amounts of capital in bitcoin, also to protect themselves from the galloping inflation that has been accompanying our purchases for some time.

We then add to the Lightning Network considerations. This infrastructure is making itself known and allows bitcoin to do what it was designed to do: be spent.

Before LN, every transaction necessarily had to go through the Bitcoin blockchain. The security offered comes with two serious interrelated problems: slowness and inability to process many transactions. This makes it almost unusable for buying and selling goods: who would want to spend 10 minutes or hours at the checkout, waiting for their payment to go through?

Lightning Network eliminates these limitations and allows users to be up and running in seconds, at virtually negligible cost.

Increasingly famous, this structure puts bitcoin in a position to counter blockchains that are decidedly more performing from the outset.

We also mention the continued growth of BTC holders. Just a few weeks ago, addresses hosting at least 1 bitcoin reached the significant threshold of 1 million. This means that the interest is there despite the loss in value. Let's not forget that the number of BTC held by long-term holders is constantly increasing, as evidenced by this graph from Coinbase:

BITCOIN HOLDERS

Although in deep red on the charts, the Bitcoin universe is growing. To get some more details on the adoption in the world, we advise you to read this article dedicated to the regulations and diffusion of BTC and crypto.

BITCOIN AND MINERS

Currently, the biggest problem with Bitcoin is that of miners.

In 2022, public mining companies achieved average drawdowns of around -90%.

One of the major ones, Core Scientific, filed for bankruptcy days before Christmas. Others are at serious risk of failure.

Bitcoin therefore has to deal with a big problem: the big companies in the mining sector are in trouble. The main reason (but not the only one) is found in the excesses of the previous bull market, a period in which these players borrowed heavily to achieve higher earnings.

However, the problems are not limited to public mining companies. In fact, even "normal" miners are experiencing a period that is anything but positive.

High interest rates; increasingly expensive energy; BTC which marks -65% in one year. All these factors put miners in a very critical position.

In 2022, between January and November, the "producers" downloaded as many as 50,000 bitcoins. On the contrary, during the bull market very few specimens were sold.

Despite everything, in 2022 the hashrate of the Bitcoin blockchain rose by 32%.

BITCOIN HASHRATE

The current situation is therefore that of a competitive environment despite the many problems and ever lower profitability.

According to Arcane Research (and other rumors), the capitulation of the miner market is overstated. 2023 could be the year in which the selling pressure of miners will decrease, waiting for better times.

Bottom line: 2022 has been a tough year, we knew it. However, Bitcoin continued to generate interest: if on the one hand we saw the graphs plummeting, on the other we could see the growth of the structure in general. However, let us remember that the critical currents, primarily those of the miners, could still reserve shocks.

Now that we have an overview of the current state, let's move on to the Bitcoin Predictions for 2023.

"Not just bad news: 2022 was still a year of growth for bitcoin"

What are the predictions for bitcoin for 2023?

Based on the past and the analysis, we can identify the most probable scenario.

This is not financial advice. We do not in any way want to push the purchase or sale; each one carries out his own research and takes the necessary decisions. The following is a collection of our considerations that could clearly turn out to be wrong.

First, a return of the bull market is unlikely anytime soon. The factors that justify this statement are different, among which we list:

Restrictive central bank policies. While we may see a gradual decrease in interest rate hikes, they will continue to rise. The markets will therefore not have a favorable environment to get back on track.

We are not sure if BTC has bottomed out. Although the downtrend is slowing down, a real construct is not yet formed (although it appears to be underway).

There are critical issues that cannot be ignored: inflation, international tensions, crises of various kinds.

We then find specific problems regarding bitcoin: back from a tough year, CeFi and exchange in the storm, miners and so on. All factors that do not benefit the asset.

That doesn't mean we couldn't see upside. However, what seems less probable is a real bull market, capable of decisively reversing the trend we have been in for the past year.

At the same time, perhaps we will be able to escape other months and months of deep red. Bitcoin has already left a lot of value on the road and we may have entered a phase of accumulation by anticipatory investors.

If we look at traditional markets, a bear market lasts an average of 1.7 years. In this period there is an average decline of 30%.

Reasoning on the weather, we could therefore have already completed the halfway point a few months ago. As for the decline, cryptocurrencies cannot be compared to other assets: too young and subject to enormous variations, whether upwards or downwards.

MARKET TREND

The market repeats itself and needs its time. In the image above, the bottom built by the S&P 500 index between 2008 and 2009: it took several months to complete the work.

Bitcoin should not be outdone; difficult to think about restarting without first having created a solid bottom structure.

However, we have no certainties: it is one thing to talk about probabilities, comparing past trends with the present one; another is to find confirmations that only time can provide. Also because if we look at the annual graph, the situation is anything but rosy.

ANNUAL BITCOIN

2022 corresponds to the engulfing bearish super candle that completely burned the rises of 2021 and a large part of those of 2020. To reverse the trend we should at least recover the closing levels of 2020 by the end of this year, otherwise the structure remains " ugly" (not to resort to vulgarity).

However, the most probable Bitcoin prediction is this: a rather flat and drained 2023, with the consolation that the worst is now behind us. The analysts of Arcane Research also think this way, who argue:

“Bitcoin will trade in a predominantly flat range this year, but close 2023 at a higher price than the yearly open.”

How much higher? We can't know.

Analyzes and studies offer this result as the most probable, in the light of what is known and available to us today. Will it actually be like this? We'll find out as the months go by.

Don't rush to buy BTC convinced that we are in the middle of the accumulation phase: study, think and only then eventually take action.

"2023 could turn out to be pretty flat, with no major ups or downs"

BTC-other assets correlation

After the bitcoin forecasts for 2023, let's take the opportunity to evaluate in which direction the correlation between BTC and other assets will go.

How will it change?

At one time, bitcoin and other cryptocurrencies usually behaved in the opposite way to traditional markets. For example, in negative days for the stock exchanges, it was not infrequent that we came across a triumph of positive signs for coins and tokens.

However, in recent years we have begun to see a certain correlation between the crypto world and the equity world. Not only that: cryptocurrencies have become more sensitive to events that usually affect standard markets.

We have therefore become accustomed to dealing with similar trends: if the stock exchanges go up, bitcoin and its companions often do the same; if everything is red, it is highly probable that cryptocurrencies are also in decline.

In 2022, the attention dedicated to this phenomenon has been growing. However, from May onwards, the coefficients that determine it started to weaken. Translated: bitcoin is decorrelating.

In addition, the total disconnection between BTC and other traditional assets such as commodities and securities remains.

The table, referring to 2022 and coming from an interesting report by Coinbase, does not lie. Note for Reading: The closer to 1, the higher the correlation.

BTC and ETH have a good correlation with the S&P 500 index. For comparison, in 2019 this number was -0.09; in 2020 it stood at 0.29 and in 2021 at 0.24.

Moving on to other assets we find the exact opposite.

The correlation has therefore grown quite a bit over time. The attention received is more than justified.

For 2023, it is reasonable to expect a decrease in the figure mainly due to the decline in trading operations on BTC. In any case, this theme will remain among the most followed and discussed.

"For 2023 it is reasonable to expect a decrease in the correlation between bitcoin and the stock market"

Bitcoin forecasts: watch out for those who exaggerate!

We close with a warning: beware of those who make real predictions because they cannot be certain and reliable.

If analysis could give us absolute certainties, we'd probably all be relaxing in the sun in the Bahamas. Unfortunately no one owns the crystal ball; consequently, it is impossible to make foolproof predictions.

However, we must not remain passive: analysis and study allow us to think about the probabilities, so as to put ourselves in the best conditions.

Using an example from outside our world, it's a bit like riding a motorcycle: we can wear all the protections but we won't be able to completely avoid the possibility of getting hurt. However, we'd probably have a better chance of getting away with it than a biker in a bathing suit and flip flops.

We hope that this insight can help you build your own (successful!) idea about bitcoin and the market for 2023.