The beginning of 2023 pleased cryptocurrency traders. After a serious crypto winter that lasted more than a year, the long-awaited thaw has come.
Despite industry bankruptcies and occasional attacks by regulators, bitcoin has nearly doubled since its November lows, with most cryptocurrencies following..
However, after the second upward spurt that followed the start of the banking crisis in the US and Europe, stagnation began..
For two weeks now, the cryptocurrency market has been fluctuating in a narrow range, waiting for developments. What is this – a temporary break, and we are at the beginning of a new bull market? Or is the current rise just a correction before a new fall?
Where will bitcoin go
Experienced traders give a simple but useful advice in any circumstances:
If it seems to you that the market has made a huge leap and the price will fly to the moon right now (or break the bottom and start drilling), switch to a long-term chart and calm down.
Now is the time to follow this advice.. Let’s compare the bitcoin charts on the most popular hourly candlesticks among speculators and daily ones familiar to investors.
So, the hourly schedule from March 10 to March 30. $10,000 growth in 10 days is impressive. They were inspired by Balaji Srinivasan, a venture capital investor and former Coinbase CTO, promising $1,000,000 per bitcoin in three months..
More balanced forecasters promise as little as $100,000 by the end of the year, while pessimists (or realists) do not expect a rise soon.
In confirmation of their words, growth was replaced by another creeping correction. Still, there are indeed reasons for optimism.
Let’s look at daily candles from the beginning of 2022. All the stunning growth of the past four months has not recouped even half of the losses from the previous year, rising only to the levels of June 2022.
According to Agent Mulder, the truth is always out there.. And according to an unknown ancient sage, it is usually in the middle. No, not a sandwich, but positive and negative factors.
This also applies to financial markets.. Let’s take the same bitcoin chart, but in 4-hour candles and only for the turning point, when the fall was replaced by growth.
Perhaps this chart doesn’t tell much to beginners.. This design, vaguely reminiscent of the classic “head and shoulders” technical analysis figure in an inverted form, or an unfolded “saucer” fractal formation, is very often found on cryptocurrency charts..
Similar figures formed on the Bitcoin chart in 2014, 2017 and 2020 during a trend reversal. Then, after several sharp falls, a cautious growth began, accompanied by long corrections..
The “preparatory stage” can take a year or more, and only then follows a wave of growth sweeping away all obstacles, ending with another historical maximum.
And it is also inevitably followed by another collapse, which, however, does not reach the lows of the beginning of the previous “bullish” wave.
A similar pattern has been repeated three times already, which means it can happen again.. But, if we follow the chronology of past events, the accumulation phase is just beginning..
After all, less than five months have passed since the annual lows. So, we can expect new corrections and long-term stagnation..
Moreover, all markets and the entire global economy are now in a storm, and cryptocurrencies are not yet independent enough to grow in spite of everything.
In derogation from the classical rules of technical and wave analysis, based on specific lows and highs, in cryptocurrencies, due to high volatility and immaturity of the market, reliance on “round” numbers often prevails..
Also now, the price of $ 30,000 acts as a resistance level, when approaching which the growth slowed down significantly.
And the support is the $20,000 milestone, from which the price of bitcoin pushed off in early March.. To the delight of technical analysis fans, the 200-day SMA was also taking place there at that time.
Yes, the upper limit is closer now and, it seems, one more effort – and bitcoin will again rush into space. But so far there is not enough strength for this, and before the growth continues, a more significant correction suggests itself, which will enable optimists to buy BTC at a lower price..
The reason for such a correction can be any major event, not even directly related to cryptocurrencies. The exit from the current flat is important, as it may determine the trend of bitcoin for this year.
If BTC manages to gain a foothold above $30,000, bulls will get a dose of optimism. And a serious rollback from current positions will delay the continuation of growth for months.
Factors influencing the cryptocurrency market in April 2023
Price-forming factors, both internal and external, are divided into short-term and long-term. If the former cause sharp movements that occur over several days and even hours, then the latter form trends for years to come and are usually not taken into account by speculators..
The beginning of 2023 has become the focus of the most controversial factors, from high-profile events in the industry to the changing global political landscape.
Banking Crisis and Rising Rates Amid High Inflation
The most original experts believe that the sharp rise in bitcoin in March is associated with the bankruptcy of several banks, wholly or partly associated with the cryptocurrency industry: Signature Bank, Silvergate Bank and Silicon Valley Bank..
However, the crisis quickly went beyond the industry and spread to traditional institutions. Lost stability and was sold for a penny one of the oldest banks in the world – the Swiss Credit Suisse, there are doubts about the stability of Deutsche Bank and several French banks.
In addition, several other cryptocurrency players have gone bankrupt in recent months: lending startup BlockFi, lending platform Celsius, mining company Argo Blockchain, bankchain developer Marco Polo, and several other smaller projects..
Other companies have so far managed to limit themselves to staff reductions, but they remain at risk. Previously, the ruin of cryptocurrency banks and companies was presented as the reason for the collapse, now bankruptcies are presented as the reason for growth.
Well, every expert is entitled to their original opinion.. However, the collapse of individual companies is only the tip of the iceberg, and as the crisis deepens, they may be followed by a bigger fish..
Now regulators are at a crossroads between slowing down the economy and fighting inflation, which is declining much more slowly than forecasts.
With all this, the Fed continues to raise the rate, offering distressed banks a selective rescue through a targeted injection of liquidity, that is, the continuation of the issuance of the dollar, but more cautious.
There has never been a similar situation in the global economy, so the nervous reaction of the markets to any negative is expected.. And cryptocurrencies are perceived as a refuge from the global crisis by a very small proportion of investors.
The stablecoin crisis and the rhetoric of regulators
The first quarter of 2023 was a real test for the largest stablecoins, which alternately lost their peg to the dollar and part of their capitalization.
It started with BUSD, which lost its position as a reliable asset after accusations from US regulators and a ban on issuing tokens in the US. Its exchange rate against the dollar briefly fell by more than 10%.
After that, the stablecoin began to disappear from the largest exchanges, including “decentralized ones”, and even Binance itself abandoned its asset in its own investor protection fund..
At the beginning of April, only $7.5 billion remained from the capitalization of BUSD, that is, less than a third of the maximum values in the fall of 2022.
The closest rival of Binance also has no reason to be happy. USDC is next. In the very first days after the collapse of Silicon Valley Bank, the issuer of the token lost more than $3 billion, and the stablecoin itself lost 11% of the value, but the troubles did not end there..
At the end of March, USDC lost more than $2 billion in a week. Thus, even the most regulated and trusted of the dollar tokens turned into a slippery slope after BUSD..
In the second week of March alone, Circle was forced to redeem more than 6 billion USDC, and in just March, USDC capitalization fell by $12 billion, that is, by more than 25%.
Of the three largest stablecoins, only USDT has not been significantly affected so far.. However, his turn will come, which is transparently hinted at, for example, by “revealing” articles from major American publications.
Indiscriminate branding of the regulatory baton and intensifying attacks by US officials have spooked the cryptocurrency business. This was finally noticed even by the leading industry media.
Major exchanges Coinbase and Bittrex, following Binance and many others, plan to leave the US, especially after the SEC statements of distrust in the market and the threat of recognizing most crypto assets as securities, with the corresponding obligations of issuers to disclose information.
It is possible that the statements of officials do not always express only personal opinion, but gradually create the background for the widespread and mandatory introduction of state digital currencies, which ensure truly complete control of the Central Bank over monetary circulation.
Aggravation of the geopolitical conflict
The situation in the world continues to heat up – NATO countries are expanding arms supplies to Ukraine and the production of ammunition, Russia is also increasing the production of military products.
This means that the end of the “hot war” is not visible on the horizon.. The “Taiwan issue” has not been resolved either, the United States is gathering allies to create an anti-Chinese alliance AUKUS in the Pacific region.
The “Eastern Bloc” is also on the alert, although it still has no established political alliances.. Xi Jinping visits Moscow to conclude series of agreements amid Vladimir Putin’s ‘arrest warrant’.
India plays the role of a dark horse … an elephant that everyone wants to win over to their side. Never-before-seen shifts begin in the Middle East as Saudi Arabia, UAE and Turkey forge ties with Iran and Syria.
The largest Arab exporters begin to conclude agreements on the supply of oil for yuan and other national currencies.
This is slowly but surely undermining the petrodollar’s nearly century-old dominance, and will increase inflationary pressures on the US dollar in the long run.. Which, in turn, means the growth of assets quoted in dollars. Including cryptocurrencies.
Contrary to the expectations of optimists and pessimists, the processes of restructuring the world economy take decades. The global market is more complicated than most people imagine, even those involved in stock trading.
Single narrowly focused actions mean little, even if they are trumpeted by all the media. The overall success or failure of the formation of a new financial and logistics system in the East is decisive. And it will take many years.
A reliable alternative settlement system, standardization of regulation, currency control, quote providers, reinsurance and rating agencies are only parts of a complex mechanism that will have to be set up almost from scratch.
How will cryptocurrencies behave in a situation of a global economic and political storm? Indulging in unbridled optimism is pleasant, but dangerous. After all, payment systems free from regulation interfere with all states, regardless of their foreign and domestic policies.
Top 10 Cryptocurrency Trends for 2023
Most cryptocurrencies follow the movements of the bitcoin price.. However, due to the peculiarities of each project, individual coins and tokens can move with a significant lead or lag behind the market..
In some cases, they even go in the opposite direction – they fall on the general growth or grow on the general fall.. What are the positive and negative factors that could cause the price shifts of the top 10 cryptocurrencies in 2023?
Ethereum (ETH)
The second cryptocurrency is approaching a long-planned journey to Shanghai: the advent of sharding, i.e. parallel confirmation of transactions across multiple chains. In the long term, the use of sharding will increase the scalability of the underlying Ethereum blockchain by dozens of times..
The Shanghai update has already been activated on most testnets, and it was successfully activated on the Goerli testnet on March 14.
The launch of Shanghai on the main Ethereum blockchain is scheduled for April 12 at epoch 6209536, and there is no reason to postpone this event.
After the successful activation of the hard fork, ETH is able to show growth ahead of the market or a slower fall in the coming months.
However, against the background of the priority interest of investors in Bitcoin and attacks on the centralization of staking in Ethereum, the factor of improving scaling and lowering fees is relegated to the background and is actually not included in the price..
Since the beginning of 2023, ETH has fallen in price against BTC by almost 20%. Even this can be considered a success, as the other leading altcoins have generally fallen far behind the flagship.
Unlocking the withdrawal of ETH from staking contracts plays a minus for the ether as part of the activation of Shanghai.
However, the influence of this function is greatly exaggerated in the media environment.. Due to protocol level restrictions, the flow of unlocked ETH to the market will be slow (no more than 43,200 ETH per day) and will not be able to significantly affect the price.
Binance Coin (BNB)
The main problem with BNB is centralization. The underlying blockchain and all projects running on it depend on the Binance exchange, and its state over the past six months can hardly be called stable.. Thus, the main factors influencing the BNB price are not technical or economic, but purely political.
The crisis of confidence in BUSD, caused by attacks by US regulators, and the constant drop in the capitalization of the still third stablecoin, which has fallen from $23.5 billion to $7.5 billion since November, undermines the financial stability of the exchange, which has lost almost all the “safety cushion” accumulated over five years.
Even Binance itself has abandoned the use of BUSD in its own user asset protection fund. Without waiting for new attacks, Binance plans to exit the US market. However, the flight does not guarantee the safety of the exchange from further persecution.
Against the backdrop of all this negativity, the BNB rate is holding up well, and yet it has fallen against BTC by 39% since the end of November..
The constant burning of coins in the absence of emission still plays a plus for the BNB rate, but it cannot outweigh the numerous risks.. The BNB Chain ecosystem itself does not experience any technical problems.
By the sum of the factors, despite the relatively low price in relation to bitcoin, BNB should be considered as a long-term investment with extreme caution..
Complete reliance on Binance makes it too risky an asset. In this case, the blow may be unexpected.
Ripple (XRP)
The most amazing achievement of Ripple is that this token still maintains a stable position in the top ten cryptocurrencies.
Recent Optimism in SEC Litigation Throws XRP Nearly 20% Up. But even if the company manages to fight off the regulator and the token is not regulated as a security, what are the future prospects of this project?
Firstly, Ripple cannot be called a full-fledged blockchain.. There is essentially no true decentralized consensus on the web.. Its centralization is much higher than that of BNB Chain, and transactions can be frozen at any stage, and transferred assets are confiscated..
The main function of Ripple is fast international interbank transfers, that is, an analogue of SWIFT using some blockchain technologies. It was very much in demand 10 years ago, but the market is changing fast.
In short, Ripple may become obsolete with the development of CBDC for major fiat currencies. There is no doubt that they will come and take their market share, the only question is time.
Even if in the next year or two Ripple will be able to gather a serious client base on XRP Ledger, in the future the company will not be able to fight state monsters, because, unlike classic cryptocurrencies, there is too little unique in its technology.
However, the market assesses the prospects for XRP quite sensibly.. Since October last year, the token has lost more than 35% of its value against BTC, and the recent surge has little changed the overall trend..
XRP may please traders in the short to medium term It is likely to follow bitcoin during this year. The decision in the SEC case will give a short-term boost, but it will not have a long-term effect.
Cardano (ADA)
The Cardano project has a very controversial reputation in the cryptocurrency community for a reason.. On the one hand, it retains the reputation of “the most academic blockchain” among fans, on the other hand, most users are tired of the ongoing “breakfast feeding”.
Simply put, the developers make too many promises, but their implementation still leaves much to be desired. In early March, analyst Vanessa Harris accused the developers of the Cardano blockchain of centralizing.
In her opinion, in reality, the project is controlled by a few holders of staking pools and delegates.. In response, the founder of the project, Charles Hoskinson, called her research the usual fear-mongering and uncertainty (FUD).
At the moment, Cardano has prospects, but there is too little real use in existing applications.. The stability of the Cardano blockchain is also not up to par – two months ago it suffered another failure, and half of the nodes disconnected from the network for some unknown reason.
Perhaps the developers will be able to defeat the brownie that has settled in the blockchain, but for now, Cardano should be classified as a speculative asset that can both “shoot” and sink. In the absence of major internal events, ADA is likely to follow the market, gradually losing value against Bitcoin.
Polygon (MATIC)
Polygon is the most popular Ethereum add-on.. Many projects are based on this sidechain, for which the bandwidth of the underlying Ethereum blockchain is insufficient.
Large companies are also paying attention to it.. For example, Siemens issued a test package of annual bonds for 60 million euros on Polygon.
However, the general downturn in the industry is also affecting successful projects.. At the end of February, Polygon Labs announced a reduction of up to 20% of employees in several offices in the US, Canada and India..
However, the company continues to work, although the MATIC token has fallen by 40% against Bitcoin since November 2022.
In the near future, for Polygon, as well as for other Ethereum competitors, a serious threat is the activation of the Shanghai update..
Improving the scaling of the underlying blockchain in the first place will reduce the attractiveness of add-ons aimed at solving this problem.
On the other hand, Polygon has a qualified team and is likely to be able to offer unique opportunities to keep the projects already running on it..
Moreover, the fall in the MATIC rate is already quite large. Do not panic and get rid of this token as soon as possible, at least until certainty is reached with the introduction of sharding in Ethereum.
But opening new medium-term positions on it should not be done without an in-depth study of the project and a sound risk assessment.
Dogecoin (DOGE) and Shiba Inu (SHIB)
The fact that two meme cryptoassets, DOGE and SHIB, are still listed at 9th and 14th respectively, from a market point of view, can be seen as an extension of the collective madness.
What has kept the value of a coin with a cute dog for many years, except for Elon Musk’s tweets? What are the benefits of meme tokens and do they have unique technologies?
Dogecoin basically copies other people’s technical solutions, although for a long time it really was one of the most convenient means of transferring small amounts..
But now many blockchains offer a similar speed of transaction confirmation, and stablecoins offer stability of the exchange rate.
The developers of the Shibarium blockchain, to which the SHIB token is planned to be migrated, are so unskilled that they cannot even cover their tracks when copying someone else’s code. What breakthroughs can be expected from such a team?
Here we are dealing with an emotional phenomenon that forms self-sustaining expectations.. And it could go on forever.
Therefore, playing on the courses of meme cryptoassets is a lottery, it is pointless to apply any methods of fundamental analysis to them.. They have been and remain the subject of speculation.
Solana (SOL)
Solana is another typical representative of the unrealized “Bitcoin and Ethereum killers”. The creators of the project promised the highest scaling in the industry and leadership in the decentralized applications segment..
In reality, developers still cannot solve stability problems. Various failures in the functioning of the blockchain occur almost every month. Therefore, unlike the leading platforms on Ethereum, projects on Solana are forced to close due to lack of liquidity.
So far, we can only state that the Solana developers cannot cope with their creation and fulfill their obligations.. Against the backdrop of a steadily developing Ethereum, Solana looks like HEX (a popular Cyrillic abbreviation known to insiders).
The flight of projects from this blockchain began after the collapse of FTX and intensified towards the end of 2022, as Sam Bankman-Fried was one of the largest investors in the development of Solana. Even after some revival in January, the outlook for the failed Ethereum killer remains bleak.
After the successful activation of the Shanghai update on Ethereum, dark days may come for Solana – even more outflow of projects to a more reliable blockchain is possible and the accompanying collapse of the main token.
But even now, SOL holders have nothing to rejoice at – since November 2022, the coin has fallen to bitcoin by 58%. And even with a general short-term bullish trend, the SOL chart for Bitcoin looks strictly down, unlike more successful competitors.