4 Questions To Ask When Buying Crypto in 2023

David Azaraf | December 29, 2022
5 min read

Many investors and traders will be happy to see the back of 2022, a tumultuous year which saw the end of COVID but at the same time, the start of a messy war, rabid inflation, and sharp decreases across capital markets. As we enter 2023, many sectors of the economy are hoping to make a swift comeback, crypto included. 

How To Identify Trading Opportunities in 2023

Investors look at many different criteria when identifying trading opportunities. Fundamental traders look at the WHY –  what is the reason for trend direction and what will fundamental analysis predict moving forward? 

The fundamental reasons can be short or long-term in nature, which can be difficult in a relatively new marketplace without much of a track record in comparison with traditional markets.

Technical traders are less concerned with the why, and it’s all about the WHAT – what is the price now, and how did the market get to that price? 

This method involves the use of technical indicators to track previous trends and applying this information when looking ahead for potential trade opportunities.

The Year in Crypto: Record Prices Followed by a Crash

Cryptocurrency prices soared in 2020-21 with both Bitcoin and Ethereum setting record highs on a regular basis. We saw BTC rocket from $7,000 to $69,000 and ETH soar from $250 to almost $4,800 over this two-year period. It seems the fundamentals and technicals were all lined up for this historic rally. Nevertheless, a series of unfortunate events led to a swift reversal. 

As 2022 draws to a close, the crypto economy continues to establish itself as the economy of the future, notwithstanding the recent fallouts in the industry. The warning signs were there back in May with the Terra Luna crash, and again in June when Celsius froze clients’ assets. Finally, crypto’s ‘Lehman moment’ happened in November as FTX came crashing down, losing tens of billions of dollars in the process. 

HODL: Resilience in the Face of Adversity

In spite of these events, there is a definite air of confidence, almost a bravado sense of survival that has shone through despite the contagion effects of the FTX collapse. The intrinsic value of the digital ecosystem remains unchallenged as blockchain technology confirms the transparency that every investor is looking for.

Savvy investors keep their eye on the ball, always looking at the big picture rather than getting caught up in the media headlines and the drama which often do not tell the whole story. 

Cryptocurrencies have maintained a level of adoption in spite of:

  1. Wider macro volatility, coupled with a limited mainstream understanding of the intricacies that are blockchain, DEFI, and a full range of new digital asset classes.
  2. The alarming number of fraud cases, hacking, and misappropriation of client’s funds, all being exposed in relatively quick succession

As the markets attempt to catch their breath, investors will continue to look for trading opportunities. Volatility, trend identification, and newly formed correlations between different instruments and asset classes are all factors to monitor in the new year.

The 4 Questions Every Crypto Trader Should Ask Themselves

  • Have you set goals for what you aim to achieve by buying crypto?
    Many people are attracted to the crypto eye-popping returns promised by various projects. Ask yourself if that’s a route you want to take, or whether it bears taking a long-term attitude.
  • What is your trading plan, and do you understand it clearly enough to follow?
    Be sure to have prepared your plan with goals and objectives, including a well-defined money management strategy. The psychological and emotional aspects of successful trading can only be kept in check by following a strategy that you understand.
  • Are you limiting your exposure in terms of a diversified portfolio?
    No trader should put all their eggs in one basket and regardless of the dollar amount in your portfolio, be sure that your investments allow for unexpected developments in any one particular segment, or sector of the market. 
  • Are you working with a regulated broker/trading platform/provider?
    Although the markets are speculative by nature, there is one aspect of your trading where you have total control – where you choose to deposit your funds. Be sure to work with a US regulated company where every aspect of your trading business will be conducted under the strictest guidelines and protection available to you.

Above all else, it’s crucial to bear in mind that only licensed professionals are qualified to give you specific financial advice. 

A Wealth Of Opportunity

When opportunity comes knocking, one should be ready. 2023 will bring a unique set of opportunities, and it’s best to prepare in advance. Be sure to educate yourself in terms of choosing your asset, or choosing a platform that does the due diligence and offers only carefully selected assets, developing your trading strategy, and ensuring that you are in a position to make calculated educated trading decisions.

David Azaraf December 29, 2022

Crypto enthusiast, help businesses plug into the token economy


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