Bearish 2022 and the Setup for a Bullish 2023

Good riddance that 2022 is finally over, it was a record year in crypto for all the wrong reasons, as major cryptocurrency scandals and hacks led to huge losses for investors.   Globally the war in the Ukraine has had a terrible human loss, while wreaking havoc on global energy markets, leading to dramatic cost increases.  Covid lockdowns and global supply chain problems sent most countries into or near recessions; impacting all asset classes not just crypto.

Bitcoin started 2022 with a value of $46,500 and closed at $16,500, losing 65% of its value. The altcoins fared worse, with 128 out of the 500 we cover losing over 90% of their value.   Only 7 out of 500 were higher in 2022 (Nest Protocol, Trust Wallet, Ampleforth, SSV Network, Santos FC Fan Token, BinaryX and OKB)

Three scandals significantly impacted the price of Bitcoin and Altcoins in 2022.  The yearly BTC/USD chart clearly shows the price decline when these scandals occurred.  These events caused immediate selling of $UST, $CEL and $FTT which led to a domino effect on other crypto assets.

2022 was also a record year for large cryptocurrency exploits and hacks, these were the Top 10 Crypto Hacks of 2022 – Over $3 Billion in total:

1)  Sam Bankman Fried (SBF) is in jail, the role SBF had with FTX and Almeda Research is direct, however questions are being asked about the influence he had on Terra Luna and Celsius Network.  Was SBF out to destroy crypto even if it meant he would lose some funds also?   If the answer to this question is yes, then just removing SBF from the crypto markets is a very bullish event.

In Sep of 2019 there was an exploit attempt against the Binance exchange that many feel was SBF.   The CEO of Binance, Changpeng Zhao or simply CZ tweeted the following:

While CZ does not name SBF here, There is only a select few that have the ability and a futures exchange to try this.    The New York Times reported that US prosecutors are probing SBF involvement in the collapse of stablecoin terraUSD and its sister token, luna.  Data indicates that FTX shorted UST and Luna in order to gain profits.  The massive sell position for the stablecoin terraUSD overpowered the available liquidity leading to a crash.  This had a domino impact on the price of Luna.  This was the spark that brought down the entire Luna ecosystem.   The downfall of Luna then leads to forced liquidations impacting many other cryptocurrencies and projects.

2) Bitcoin History - Looking at the yearly Bitcoin chart shows a pattern of a down year, followed by three up years.  This pattern has occurred in 2014 and 2018.  Many feel this pattern is related to the Bitcoin halving event that occurs every four years, and is currently projected to occur on April 2^nd  2024.

3) Bitcoin Price Support -  

The 3+ year chart above is very important; I added the orange resistance point of $13,800 and the Dec 2020 support level of $16,500.  An important theme in technical analysis is that past resistance becomes future support.   The $13,800 resistance level was in place for over 15 months until Nov 2020, after breaking resistance it would go up to $19,500 on Nov 25, three days later the price would drop $3,000 to $16,500.  In Dec 2020 the brief $16,500 support level did not seem that important, as the Bitcoin price was in the middle of a bull run that would continue to $64,000 in April of 2021.  

In 2023, the $16,500 support level is critically important and was tested multiple times in 2022.  This was especially true after the FTX collapse in November. 

In summary, The crypto world has faced a lot of challenges in 2022 and it is still standing.  The bulk of the risk seems to be behind us now and I am looking forward to 2023 as it is setting up to be a much better year.

https://quantifycrypto.com/ provides real time technical signals and analysis to support your trading decisions. We have the fastest live price feed of all cryptocurrency informational platform. Our proprietary trend algorithm calculates the predicted direction of future price moves. It is specifically tailored for the cryptocurrency market. Our state-of-the-art displays are designed to provide maximum amount of significant data on a single screen.

None of this is meant to be financial advice and I do not have any financial expertise. Although I worked at the New York Stock Exchange for over 23 years, it was as a developer supporting computer systems, not as a stock trader.

Full discloser: I do own Bitcoin and other Altcoins.