• Bitcoin (BTC) experienced its second-worst year to date (YTD) in 2022 since launch, predicted to remain flat through 2023 according to Arcane Research.
• The crypto winter of 2022 was caused by tightening macro conditions and exacerbated by crypto-specific leverage and poor risk management.
• Bitcoin is expected to remain flat in 2023, but close the year at a higher price than it opened.
Bitcoin (BTC) experienced a turbulent year in 2022, experiencing its second-worst YTD performance since launch. According to Arcane Research, the cryptocurrency is predicted to remain flat through 2023, with a better performance than the year before.
The downturn in 2022 was caused by multiple factors, including tightening macro conditions, crypto-specific leverage, and poor risk management by core market participants. The Federal Reserve’s effective funds rate rose from 0% to 4.25%, leading to a massive repricing of risk assets that all benefitted from easy money and a low-interest rate regime in late 2022 and throughout 2021.
In spite of the downward trend, Arcane Research predicts that Bitcoin will remain flat in 2023. However, the cryptocurrency is expected to close the year with a higher price than it opened. This would make it the longest-lasting Bitcoin drawdown ever.
It remains to be seen whether the predictions of Arcane Research will be accurate, but it is hoped that the cryptocurrency will experience a better performance this year. With the right market conditions, it is possible that Bitcoin could experience a rebound in 2023.
Investors should take caution when investing in cryptocurrencies and remain aware of the risks associated with the market. Despite the potential for gains, the volatility of the cryptocurrency market means that losses can occur just as easily. Therefore, it is important to understand the market and make informed decisions when investing.