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Last Week Summary
- Blackrock lends money to bankrupt mining firm Core scientific.
- Valkyrie unveils proposal to help/takeover troubled firm Grayscale.
- Michael Saylor sold BTC and MSTR stock and re-bought BTC worth about $45M in December.
- BMW partners with Binance for a loyalty program on BSC.
- Fidelity aims to offer NFT & crypto trading services.
- MTGOX payment details deadline nears (10th of January) with the expectation that payment will follow soon after.
Legacy Markets – VIX
VIX is still consolidating around 21. 21 has been a clear pivotal level with the market derisking quickly above and seeing relief quickly below. With this being fairly compressed as in every market out there, we can expect that volatility will pick up sooner than later.
Legacy Markets – DXY
DXY had a stunning rally last year with the FED rates hiking while other continents did not. Around October, DXY was slowly starting to top out. This did give relief to the entire board of risk assets most seeing a typical bear market rally. This became a quick shortcut because of the FTX fraud. Coming into the new year after the large rally and large drawdown, we’d expect DXY to take quite some time to base and/or slowly regain its trend. So there still is a time window for risk assets to run.
BTC Weekly View
Going into the new year BTC has been consolidating quite a bit below the 3AC bottom from June. Price has so far failed in any downside continuation with most being just consolidation. In January the MTGox creditor payout is happening so the market will likely see some fud about this. However, most claims have long been sold to bigger entities, so it’s unlikely this will actually create massive sell pressure from the repayments themselves.
ETH Weekly View
ETH is showing quite the compression. With volatility hitting historical lows on both ETH and BTC, compressions like this have led to massive moves before, with the immediate threats of the FTX fraud being frozen in legal strings. There doesn’t seem to be a clear crypto-specific catalyst that could send this lower. (Other than macro QT and big tech being on a cliff AAPL, AMZN…). In March, ETH will have the Shanghai upgrade. We think staking will be a popular narrative in the future for institutional investors & maybe even companies. But it is still unknown if those are gonna pull the trigger in the current macro environment.
ETH/BTC is one big inception away from a giant consolidation into a micro consolidation, showing signs that it is ready for a massive move. With BTC getting quite a bit of “perceived” overhead from MTGox (Note the perceived!). We think ETH/BTC is primed for the breakout in 2023 and forward. As ETH has all the innovation going from NFTs to Defi to DEX ecosystems. If it can break to the upside, our expectation would be, it runs to ATHs on the ratio.
TOTAL2 – USD Market Strength
TOTAL2 is still weak. With only a select few coins having some strength going. All the rest are bleeding and money flowing from these back into ETH & BTC as investors are trying to flee back into safety. We think this is a theme that will play out for quite a while in 2023. BTC and ETH will first need to trade at acceptable higher levels before retail flow comes back in to speculate on lower-tier coins.
TOTAL2BTC – BTC Market Strength
TOTAL2/BTC reflects our thoughts of TOTAL2 rejecting ATHs again and now looking quite a bit weaker than ever. This is currently being carried by ETH and some other high caps (like LTC, and XMR…) that have relative strength.
- MTGox payouts in January.
- The deadline to give payment info for creditors is on 10-Jan-23.
- Wall Street is starting to show interest in distressed crypto companies.
- Valkyrie and Blackrock is already trying to make moves.
- Volatility is at historical lows, so a larger expansion forecast is expected for January.
- We are prop positioning via long ETH ATM 3m straddles.
- CPI is on 12-Jan-23.
- No FOMC this month.