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.
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.
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.
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:
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.
Above all else, it’s crucial to bear in mind that only licensed professionals are qualified to give you specific financial advice.
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.
The INX Digital Company inc. is an expert in the field of finance, crypto and digital securities.
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