Bitcoin returns to $18,000, is 2023 a good time to get on the bus?

This morning, Bitcoin broke through 18,000 US dollars strongly, ETH stood at 1,400 US dollars, and other currencies also rose to varying degrees. The total market value of encryption returned to 900 billion US dollars.

Even the Grayscale Bitcoin Trust (GBTC), which had been deeply discounted before, rose 12% on Monday, marking the fund's biggest one-day gain since February 2022. At present, the net value discount rate of GBTC has dropped from 45.1% at the beginning of the year to the current 38.8%, and the net value discount rate of ETHE (Grayscale Ethereum Trust Fund) has dropped from 59.3% at the beginning of the year to 51%.

Various signs seem to suggest that the encryption market is ushering in a recovery. Slogans such as "Niu Hui Hui Hui" and other slogans resounded on major social media, and crypto investors under optimism seem to be full of faith again.

However, analyze the market relatively calmly and restraintly: Although the pace of global interest rate hikes will slow down in 2023, liquidity is still poor, and it is difficult for the financial market to rebound sharply; Bankruptcy, the encryption market is in the stage of digesting the impact, and it is difficult to have enough funds to promote a sharp rise. In addition, data on the chain shows that some giant whales have begun to increase their holdings of BTC; from a cycle point of view, 2023 is more like 2015, "this also means that we may bottom out around August 2023."

1. The total market value of encryption hits the trillion-dollar mark

At the beginning of 2023, the encryption market will usher in a "little spring".

Bitcoin continued to rise from US$16,534 at the beginning of the year, and broke through US$18,000 today, with a cumulative increase of 9.4% during the year, and is currently at US$18,100; ETH has a cumulative increase of 17.1%, and is currently at US$1,402.

Looking at other cryptocurrencies, among the top 50 cryptocurrencies by market capitalization, except for stablecoins, they have recorded good gains in the past 24 hours; in the past 7 days, the gains have generally been within 10% to 20%. From the perspective of the sector, the "liquidity staking solution" has attracted much attention from the market. In the past 7 days, the sector as a whole has increased by 26.3%. The "troika" Lido DAO (LDO), Rocket Pool (RPL) and Frax Share (FXS) The cumulative increases during the year were 91.5%, 43.3% and 37.1% respectively.

Affected by this, the market value of the entire encryption market rose to 924.7 billion US dollars, returning to 900 billion US dollars again after a month, and is launching an impact on the trillion-dollar mark; since the beginning of the year, the total encryption market value has increased by 96.2 billion US dollars, a cumulative increase of 11.6 % . Encryption users' trading enthusiasm has increased significantly. Today's panic and greed index is 30, and the level is still "panic", but the level of panic has dropped compared to a week ago.

In addition, mainstream institutions have increased interest in Grayscale products. For example, Morgan Stanley European Opportunities Fund revealed that it has purchased the Grayscale Bitcoin Trust Fund GBTC worth US$3.6 million this month. The actions of these institutions directly promoted GBTC's 12% rise on Monday (January 9), the fund's biggest one-day gain since February 2022, outperforming other risky assets such as Bitcoin. The data shows that GBTC’s NAV discount rate has dropped from 49% last month to the current 38.8%; the Grayscale Ethereum Trust Fund (ETHE) NAV discount rate has dropped from 59.3% at the beginning of the year to 51%.

Grayscale FundGrayscale FundThe total holdings are USD 16.191 billion, and the trust discount rates of mainstream currencies are as follows: ETC (-69.11%), LTC (-56.21%), BCH (-52.63%), ZEC (-44.24%), MANA (-11.76%), XLM (-21.66%), ZEN (-38.96%), LPT (-44.56%), BAT (-50.26%), the only two products with positive premiums are LINK (6.29%) and FIL (74.64%).

Encryption-related listed companies are also affected by the rising market, and their share prices have generally risen by more than 10% in the past week. Among them, Canaan Technology (NASDAQ: CAN), the first mining machine stock, rose 29.8% to $2.52 temporarily; the U.S.-compliant encryption platform Coinbase (NASDAQ: COIN) rose 31.6% to $43.79 temporarily; the largest listed company with bitcoin holdings MicroStrategy (NASDAQ: MSTR) shares rose 24.4% to $194.76 temporarily; mining company Argo Blockchain (LON: ARB) has seen its stock price rise by more than 122% this year, and the current increase is still 56.2%.

2. Analysts’ outlook forecast

first,

first,Direct Impact of Macroeconomic Conditions on Crypto Markets, including geopolitical instability, market chaos caused by the war between Russia and Ukraine, the COVID-19 pandemic, and the continued interest rate hikes by global central banks, especially the Fed’s seven interest rate hikes last year, which greatly reduced global financial liquidity. It is also difficult to be alone.

Founder of ARPA and Bella ProtocolFelix XuAccording to the analysis, the Fed's terminal interest rate is 5%, and it has reached a level of 4.25% to 4.5%. Although the pace of interest rate hikes in 2023 will slow down, liquidity is still poor. "Liquidity in 2023 is slightly better than in 2022, creating some support for prices, but a sharp rebound seems unlikely."

Felix Xu added that from a cyclical point of view, the current encryption market is more like 2015 than 2019. "Because the Fed is unlikely to cut interest rates like it did in 2019, it also means that we may bottom out around August 2023." 82% in 2023 and 76% so far in 2023.)

Bloomberg Crypto Market AnalystJamie CouttsOpinion: “2023 is likely to remain a problematic year for risky assets (recession), but our global liquidity measures are starting to turn around, creating tailwind conditions for BTC and a tentative start to a new cycle.”

Like Gokhshtein, venture capitalistsTim DraperIt is also optimistic about the market in 2023. It believes that BTC will soar to 250,000 US dollars, and the halving of Bitcoin in 2024 will also push its price up. “Bitcoin gives people a way to bypass middlemen. Retailers save about 2% on every bitcoin transaction compared to dollars, and once retailers realize that 2% allows them to Double your profits and Bitcoin will be everywhere.”

In addition to macro factors,The encryption market itself also has many obstacles that affect the rise of the market. In the past 2022, there were frequent bankruptcies of companies or projects in the encryption market. A series of black swan events such as Terra, Three Arrows Capital, Celsius Network, Genisis, and FTX directly caused Bitcoin to fall below $20,000 for the first time since 2020 and continue to for several months. At present, the impact of the bankruptcy of many companies is still being digested by the market. As a highly volatile risk asset driven by liquidity and sentiment, Bitcoin has the potential to rise sharply only when market sentiment recovers.

In addition, the encryption market also pays a lot of attention to whether DCG will have a thunderstorm. According to the current summary of information from all parties, the short-term debt scale of DCG is 525 million US dollars (due in May 2023), and the long-term debt scale is 1.1 billion US dollars (due in 2032); DCG officials have not announced the current value of assets held, but only Claims that its stake is worth $10 billion. It is this kind of information opacity that makes investors not optimistic about the market expectations in 2023, so they choose to hold positions and wait and see.

Head of Global Research, Standard Chartered BankEric RobertsenIt is believed that Bitcoin will continue to fall in 2023, possibly plummeting 70% to $5,000. He added that if the cryptocurrency industry sees more bankruptcies following the FTX crash and the Federal Reserve decides to keep raising rates, Bitcoin could crash.

3. Data on the chain: BTC giant whales are increasing their positions

Some on-chain data about Bitcoin may give us some confidence in the future.

First, realized losses show that Bitcoin may have bottomed out. Every Bitcoin price bottom has been marked by prolonged forced sell-offs and increased realized losses, as holders surrender and sell tokens. According to Glassnode data, there were two historic capitulation events in June and November last year. In particular, the FTX event resulted in a single-day loss of $4.43 billion, setting a new historical record.

Additionally, Glassnode observed that the ratio of realized profits to realized losses hit a record low last November, after previous ratio lows of similar magnitude occurred at cycle bottoms in bear markets in 2011, 2015, and 2018; The trend turned and both started a bull market the following year. The report noted that the market correction could last several months before the trend reverses.

Second, fromHolding timeLooking at it, more than 75% of addresses have held coins for more than 6 months without moving coins, which may indicate that holders view it as a long-term investment.

Finally, Bitcoin whales started hoarding coins. According to Santiment data, whale addresses holding 1,000 to 10,000 BTC were not active in December; but since January 5, these addresses have begun to accumulate, and the cumulative BTC holdings have increased by about 20,000. According to Santiment data, these addresses currently hold a total of 4.57 million BTC, accounting for 23.7% of the circulating supply. In addition, whale addresses with more than 10,000 BTC—these addresses mostly belong to exchanges and "wealth classes" such as Michael Saylor, have a large amount of BTC exposure, and their holdings have increased by more than 20% in the past two months, That could be a sign that the wealthiest are adding to their positions.