January 18th 2023 - Out of the Woods?

The people in this part of the world have a saying “A day could be known by the morning”. If that is true, than 2023 is likely to be much better for cryptosphere than 2022. Roughly three weeks into new year, price of Bitcoin has been steadily going upwards and went over the once unbreakable support line of 20,000 US$ that had been so spectacularly and disastrously smashed in November after FTX fiasco.

As many commentators on social and other media have observed, it takes an extremely short term trend to nearly completely change the general sentiment in the cryptosphere. All those warning of continuing crypto Armageddon and sometimes desiring Bitcoin at the bargain price of 10,000 US$ and below are now looking as discredited as moonboys who were promising 100,000 US$ one year ago. Now everyone is starting to talk about the worst of the crypto winter being over, the bottom being reached and discussion being redirected to the start of another crypto bull market.

However, experience has taught us that Bitcoin never does what is expected of it. In so many instances Bitcoin has broken hearts of many who had planned their market moves on following general trends. It might very well happen right now. The impressive surge upwards will eventually be interrupted, price will start to go down. The question remains whether this will be the expected “healthy correction” or start another cascading panic selling that could bring Bitcoin even below the most pessimistic predictions of 2022.

Many try to answer to this questions by technical analysis, various parameters or taking macroeconomic and geopolitical circumstances into account. The easiest way of predicting what Bitcoin and crpyto would do is to apply four-year cycle model. According to it, just like 2022 was repeat of 2018 heartbreak, this year should be repeat of 2019. If that is the case, the most likely scenario is that the Bitcoin would rise over previous year’s lows and probably remain on that level for many months, occasionally interrupted by short-lasting FOMO price rise or short-term panic selling, with real spectacular price gains to be made in 2025.

However, history never repeats itself. Macroeconomic and geopolitical circumstances in 2023 are quite different than in 2019. Most retail investors who had money to indulge into crypto adventure don’t have money now and those that still do are suffering from cryptosphere’s own version of PTSD. Many who would like to sell or buy are now keeping their crypto and fiat resources away from banks or exchanges. Government regulation is going to be much bigger hindrance to development of crypto than four years ago. If the movement happens, it is likely to be slower and more gradual than four years ago. And even if it doesn’t, patience and DCA strategy is likely to serve crypto people well.

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