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Perhaps 2022 has been a forgettable year for financial investors in general and crypto in particular. Persistent downtrends caused even the most optimistic investors to leave the market.
However, in early 2023, the market suddenly came back STRONGER, bouncing up almost 50% from the lowest lows. So is Bitcoin really bottoming out? Is it going into a recovery period? Or is this just a trap set by whales and the market will have a new bottom in the near future? Let’s find out with Avaxholics.
To help you have a better understanding of the situation. We divided this article into 2 parts:
- The current bullish wave of Bitcoin
- History and market sentiment
1. The Current Bullish Wave Of Bitcoin
Before the Lunar New Year holiday of 2023, Bitcoin’s price behavior continuously went sideways and then decreased, causing investors, as well as funds to liquidate assets, along with a series of FUDs, appeared, and the exchange’s users also decreased from there.
Bitcoin at this time moved in the bottom zone of $15,000-$17,000 for more than two months before a solid breakout to over $20,000 then comes the Luna crash (MAY 2022), the price of Bitcoin plummeted to the $19,000-$21,000 zone and continued sideways for a while until FTX incident, perhaps not as many people expected.
So How Will Bitcoin And Alt Coin Fairs In 2023?
According to the lines drawn by MM on the most recent Sam’s FTX, Bitcoin has pulled to the current low of $15,800, and moving sideways for a period of time has discouraged many investors.
Since the market reached a new lower low in Nov due to the Luna Crash, fewer people hold assets compared to last year. While the MM and Whales have gathered large enough numbers but cannot be dumped. The good news is that the cash flow begins to pour in to fund future projects, which may cause the market to rise sharply in the past few days for a SHORT period of time.
BTC Dominance & USDT Dominance
At the same time that Bitcoin started to bounce, that’s when
- BTC. D turned bearish on touching resistance of 42.15%
- USDT. D fell quite sharply from 8.8% to the 7% zone
Both of these indicate that money value has shifted to BTC as a way to invest in this bearish market rather than relying on stablecoins, probably waiting for the opportunity for both BTC and other altcoins to bounce back.
When 2022 is just price pushes to suck up the liquidity, perhaps this growth is really perhaps a mini uptrend when the cash flow is too large besides, the landing of a bunch of new ecosystems like APTOS, SUI, ZKSYNC, and the hottest is probably ARBITRUM.
It is these ecosystems that have attracted a large number of new people to the market when the trend of pushing new coins is quite clear, most recently Aptos when it has increased nearly 8 times from the $3 zone to more than $20.
DXY and Macro Economics
In the recent period, the dollar has continuously lost strength ==> DXY decreased, thereby facilitating other alternative assets to rise such as gold and Bitcoin.
On January 17, After announcing the PPI decreased by -0.5% compared to the expected -0.1%. The US stock situation showed signs of optimism,the PPI fell deeper than expected, indicating that consumer prices are stable, which will not cause too much inflation, and the DXY began to show signs of decline.
Political and economic factors are having more or fewer impacts on crypto. Inflation has shown signs of deceleration and is trending to cool further. This caused the FED to slow down the rate hike from 0.75% to 0.5% at the FOMC meeting in December. This may lead some investors to believe that the market is approaching the final stages of raising interest rates, even halting or cutting rates.
In addition, China lifted the Zero Covid order and opened its economic markets. This is extremely important and bullish for the crypto market as the cash flow is largely coming from China. After The Lunar New Year is also the time when Asians will pour money back into the market to buy and hold assets.
2. History and Market Sentiment
As you know, the financial market always follows 4 stages:
During each downtrend period, the market will always have recovery waves to attract liquidity as well as new users. In 2019, when Bitcoin dropped to the $3,500 zone to liquidate all orders, then there was a strong rebound to the $14,000 zone.
This can be seen as the distribution period after the discount. When MMs have gathered enough BTC as well as altcoins, they will push the market up sharply to attract liquidity thereby taking profits => The wave period in 2019 is an example when soon BTC fell back to the $3,000 region.
The current bull market is also quite similar to 2019 when all the FUDs were leaked to price, MM has gathered enough to pump. A lot of altcoins have x3-x5 from the bottom, even x10 for the recent rising AI trend such as AGIX.
Along with that is the move to push altcoins to exchanges in the last 1-2 days => he profit-taking move is quite similar to 2019. It is possible that the MM team will continue to push the market because compared to 2019 BTC has increased 5 times in the wave, in 2023 BTC has only increased by 50%, there may be a push but you should be smart to recognize what stage the market is in.
While the downtrend in 2018-2020 lasted more than 1000, since peaking in 2021 until now the downtrend has only been about 450 days.
If the uptrend scenario is always from now on, it will probably be unlikely when the cash flow is there but not too large plus the macroeconomics is not really good, so perhaps this will just be a recovery wave.
In terms of market sentiment, when BTC drops to $15,800, everyone will think that BTC continues to crash and does not dare to buy. That’s the general sentiment of most markets because they were more careful with the lesson of 2019 when Bitcoin sideways at $6,000 for a very long time but suddenly dropped to the $3,000 mark after that.
When the general sentiment of everyone did not dare to buy, MM pushed the market up slowly and created sentiment among investors that this is just a bull-trap. And it’s clear that when BTC crossed the $20,000 and $23,000 mark, everyone thought this was an uptrend and they had FOMO into the market at the moment.
Bitcoin Fear & Greed Index is at 55 and is considered “Greed“, showing that the market is very FOMO right now.
The market is currently at an unpredictable level, compared to historical data, perhaps we are in a mini retracement wave and it will not end but if compared with the scale and economic events, there are many reasons for investors to be cautious. Perhaps the wave this time will be much different from 2019. Investors when entering the market at this time need to be alert and watch the actions of sharks and MMs to know where to take profits.
All information in the article is for reference only, this is not investment advice. Hopefully, the information that Avaxholic has gathered in the article will be useful to you.
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