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Crypto outlook for 2023: more pain to come or will Bitcoin recover?

The chaos surrounding crypto space in 2022 questioned its whole existence, but 2023 may be the year of a relief.

The year 2022 will go down in history as one of the worst years ever, especially for crypto. More than $2 trillion in value has been evaporated from the market cap of cryptocurrencies. Over $3 billion was stolen in hacks. The fall of Terra Luna, Celsius, Three Arrow Capitals, FTX, and other prominent companies at that time brought enormous mistrust in the industry, which now faces serious consequences. 

What has been seen as one of the most revolutionary spaces in 2021 became a no go zone in 2022. The crypto space was thriving as long as Bitcoin was rising, but it started dying out with Bitcoin going south. Now with 2022 behind us, many wonder what will 2023 bring?

Industry Outlook

The disastrous year caught the attention of the whole world, even of the European Central Bank (ECB), which is actively shedding a bad light on crypto while working on its own central bank digital currency (CBDC). The digital euro should be a safe alternative to crypto, according to several central banks, who joined forces with CBDC launches.

Related article: Stablecoins vs CBDCs – what’s the difference?

In 2023, we will probably see a slow adoption effort of CBDCs by several central banks. This could lead to even more increased usage of digital payments, which include cryptocurrencies. Bitcoin is becoming significantly adopted as a means of payment even in the largest stores in the world. 

High interest rates may keep the prices of crypto assets lower throughout 2023, so these are the times when dollar-cost averaging might be one of the best strategies to increase the crypto portfolio. Moreover, data from Triple-A suggest the crypto world is growing rapidly, with over 320 million users globally. This means that approximately 4.2% of people worldwide is involved in crypto despite its rapid downturn in 2022. 

crypto users worldwide

Crypto users worldwide, source: link

While Bitcoin is adopted in El Salvador, the same may be happening in Brazil as the nation passed a crucial bill at the end of 2022. Nigeria may be considering Bitcoin a legal tender this year as well. Several green flags point to a great future for crypto. However, 2023 may not show its full potential yet, but several signs show that it can be better than 2022.

Bitcoin (BTC) outlook

Bitcoin is the most important puzzle in the crypto market. Cryptocurrencies go wherever Bitcoin goes most of the time, so let’s have a look at its possible direction in 2023. For the first time in history, BTC dropped below its last cycle’s all-time high (ATH) level, which in this case was the $20,000 mark from 2017. 

BTC even dipped below $16,000, marking one of the most brutal market drops. It has also been one of the strongest ones, falling 77% in one year. The only other three years when BTC fell so much were 2011, 2014, and 2018. This is also the longest bear market ever recorded. 

bitcoin chart

Bitcoin monthly chart,  source: tradingview.com, author’s analysis

Bitcoin was trending lower in 2014 for a little more than 400 days. Now it’s been over 400 days. The OsMA indicator also showed when was the right time to buy in the past. This was when the indicator turned green, and now it’s slowly but surely happening again, suggesting Bitcoin could be trending upward in 2023.

Also read: Fed monetary policy outlook for 2023

Digital gold may continue to move sideways at the start of 2023, but in my opinion, it could pull back above $20,000 after such a disastrous year. Bitcoin is usually very quiet the year before halving (2015, 2019 and now 2023), which takes place in 2024. That is and always has been one of the biggest catalysts of an uptrend.

This is why BTC is probably not going to create ATH in 2023, but it could return some profits to investors by rising to around $30,000 in the second half of 2023. However, bankruptcies of other notable players in the crypto space could send the prices of digital assets lower again, but data suggest the worst can be behind us. Hopefully, FTX was the last multi-billion dollar company to fail.

bitcoin chart

Bitcoin weekly chart, source: tradingview.com, author’s analysis

Ethereum (ETH) outlook

Ethereum dropped below its ATH as well, being one of the few cryptocurrencies to actually create a new ATH in another bull run. Most cryptocurrencies are huge pump and dump markets, but Bitcoin along with Ethereum managed to rise higher with every bullish cycle. 

Interested topic: TOP 5 largest crypto hacks of 2022 – how much money did they lose?

After the 2021 bull market, ETH fell 81%. Now it is breaking a crucial trend line, implying an uptrend might be on the way. Or at least a relief rally. Ethereum found its bottom at approximately $900 after being at $5,000 one year back. If Bitcoin manages to rise in 2023, Ethereum could follow and jump up to about $2,500. 

ethereum graph

Ethereum weekly chart, source: tradingview.com author’s analysis

However, traders shouldn’t expect so much from ETH in 2023 as in 2021. Trading with non-fungible tokens (NFTs) helped Ethereum’s price explode. Nevertheless, NFTs went bust in 2022 because of a notable mania that caused overvalued prices. If the NFT mania returns, it could seriously help ETH to skyrocket again. 

The total value locked (TVL) of Ethereum also declined rapidly with its price, implying people were dumping ETH. The TVL size actually decreased by around $87 billion in a year, now at $23.78 billion. It is very likely that 2023 will be the year of accumulation as cryptocurrencies will find their bottom this year. Investors will get motivated to enter positions again, getting ready for the next bull run.

ethereum tvl

Ethereum total value locked, source: defillama.com

Binance Coin (BNB) outlook

While Bitcoin and Ethereum are two leading cryptocurrencies that determine the future of thousands of other altcoins, Binance Coin is also worth taking a look at. Binance is the number one crypto exchange in the world, and a notable player in the industry. It has grown from a little exchange in 2017 to the largest one in 2021. 

Read more: The best Bitcoin conferences to visit in 2023

Their token saw a massive surge in 2021, rising up to almost $700 per coin. While most cryptocurrencies declined by more than 80%, BNB is down “only” 62% at the moment. If BNB manages to hold above the support of $184 and the moving average (EMA 200), BNB might be on the way to $400 in 2023. 

bnb graph

BNB weekly chart, source: tradingview.com, author’s analysis

BNB must move above the aforementioned support to stay in the TOP 5 cryptos according to their market cap. If it falls below $184, it could crash down to $41, which could draw the whole market with it. This is, however, unlikely because it would bring a lot of pain to the whole crypto market, and Binance surely wants to keep its status as the number one crypto exchange. 

Final thoughts

Despite the fact that the whole crypto market went through a drastic year, there are bullish signs on both the technical and fundamental sides. Crypto prices fell enormously, suggesting a new wave of investors will come and buy digital assets they will consider “cheap.” 

Moreover, we are seeing notable signs of adoption. Several businesses or even countries choose to support the usage of Bitcoin and blockchain technology. While the crypto space won’t be stopped, it will get more and more regulated over time after so many frauds caught the attention of the SEC and other similar entities. 

I got into financial markets by accident in 2012 and started with Forex trading. Later in 2017, I started investing in stocks in cryptocurrencies and began writing articles profess...

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