365 days from the market top, 2023?
Market Report #34
Hi everyone and welcome back to another newsletter, this is probably the longest period without an update in some time, the last market report was released at the end of October, so apologies for the long delay. November was a super busy month for myself, had some family visit and also some crypto events, on top of all of that at the start of the November we also saw the collapse of FTX which was pretty nasty and so I wanted to not rush a newsletter and write something based on pure emotion. I really hope everyone was not too badly affected by the results of Sam and the downfall of FTX, but likely the majority of people reading this newsletter and including myself had some type of exposure. I had a good chunk of funds on FTX, got 50% withdrawn just hours before the cut-off period but unfortunately also took a significant hit. I really hope everyone has better days ahead and hopefully there is some light at the end of the tunnel for those of us who still have funds trapped upon the exchange.
365 days ago, we were at the peak of the market, so much has changed over the past year and 2022 has probably been one of the toughest trading and investing environments over the past two decades. We saw a collapse in the political, social, and economical aspects of the world, and everyone has had difficulties trying to trade such a complicated landscape. Crypto obviously was no exception and the market has taken a complete beating, now down around 75% from its peak from this time last year. Though hopefully with so much of the historical data for Bitcoin showing that cycles usually end up collapsing in this way, hopefully, you got enough money out of the market to be able to buy the dip in these difficult times.
Looking at the chart above, you can see just how significant this year has been in terms of a market correction, pretty much only downside month after month with only one short-lived relief rally before now hanging around this bottom level just above $1.1k for Ethereum and $17k for Bitcoin. We are now seeing some more long-term sideways movement for the majority crypto assets, at around -77% from the top we are now finally finding some type of median balance between both buyers and sellers. On a more interesting note, following the collapse of FTX, the market has only seen a relatively small shakeout in comparison to what we would think would be the result of the largest and biggest exchange going completely bankrupt overnight, now this will likely have knock-on effects that are yet to be revealed but it does confirm in my personal belief that the market is bottoming and that 2023 should be a more sideways leaning year, with the perfect opportunity to be accumulating heavily.
Of course, as we get closer to the end of the year, the majority of investors are looking forward to the new year and what could happen for BTC and the rest of the crypto markets. I have the feeling that of course, the majority of heavy red months are likely behind us, especially huge double-digit drawdowns, I think 2023 as a whole will be relatively flat and when we do look back on 2023, likely we will see a small single-digit growth in the market. Of course, what we are expecting during the year is for lots of the macro economical factors to recover slowly and for the world to slowly get into a better place, while laying the groundwork for a major exciting, and interesting 2024 where the Bitcoin Halving will take place, which likely put us in another bull market environment setup. 2023 will likely be a perfect year for accumulation across the board, I also think in 2023 we will see some nice bounces in the market that could spark smaller timeframe rallies, maybe giving us a month or two of double-digit growth, historically we have seen this happen in bear markets, where the price eventually ends up bottoming we get some strong low timeframe rallies that can be a great place to trade and further increase longterm positions if played correctly.
Currently, we have around 480 days until the next Bitcoin Halving event, this will take place in May 2024, so we have all of 2023 and likely some time in 2024 before we really start to see price head back towards a new ATH. Historically the year prior to a Bitcoin halving has always been a really good entry for long-term positions and just investors as a whole, talking from experience, grinding now, and making sure you are accumulating as much BTC and ETH as possible is critical to future success.
Bitcoin at the moment is pretty flat, with minor moves in both directions but nothing that we should be expected to cause any larger moves in the near term. Currently looking at this chart, it does seem as though BTC does have some weight and pressure leaning towards further downside, unless we can see the price get back above and reclaim 18.5k at the very least, this level is a key region that has previously held and is the ATH from the previous cycle. Price currently sits at around 16.9k at the time of writing this newsletter and likely has a higher chance of hitting our next support at 13.6k if we can not find some strength sometime soon and get back above support.
As previously mentioned, the next months and year should be focused on building more long-term positions, important not to get upset or caught up in low timeframe price moves, seems pretty irrelevant at the moment, and now is the best time to zoom out and really focus on what type of positions you want to have open in 2024/2025 and likely not quick intro day plays that easily could get wiped with quick volatile moves.
I think another project that I should mention is SOL, I have previously stated that SOL is one of the positions I want to be acquiring over the next weeks and months, and is one of those positions I want to have large standing in 2024/2025. Obviously, since the bankruptcy of FTX, Solana has taken a complete beating in terms of price, previously trading around $30 and now halved down to just around $13, with likely more selling pressure on the horizon as Sam still has a major % share of tokens, enough to likely send price down to $4/5 if he does liquidate his holdings, as this also has major fear factor and holders and likely price will go to a very dark place. That said, the chain itself should really see no major chances, yes some projects will change and migrate away from Solana, BUT at some point, at some price in the low single digits, I think we can determine some type of value bet. If the price just continues to move sideways, I think leaving it for at least a year before touching it seems reasonable, we have no idea what knock-on effects could take place. I currently do not hold a position in SOL and have sold my positions for a loss.
In terms of positions right now, I have a and will continue to buy BTC and ETH regularly, I actually really think that buying Bitcoin is probably super favorable due to the fact that we have no idea what is going to happen with stablecoins over the next 1/2 years. Now that FTX has imploded, likely we are going to see major regulatory pressure on the market and specifically stablecoins like USDT/USDC. I am starting to feel that BTC is just a better long-term store of value, we know it cannot get crushed by regulation, we know it cannot have a bank run and doesn’t rely on third parties to have backing 1-1, it does what Bitcoin does best, which is be a decentralized SoV. The long-term risk of holding stablecoins for years and years is actually a real risk in my personal opinion and I think BTC at the low 10/15k market seems a reasonable place to start to move some of the tethered funds back into a truly sovereign asset.
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Great 😊👌 Article