Historically, 2022 could eventually become the second worst year for Bitcoin since 2011. At its current price, BTC has a year-to-date (YTD) performance of -65%, surpassed only by 2018 when the price lost -73% in one year.
As Arcane Research points out at the end of the year report for 2022, physical gold (-1% YTD) has significantly outperformed digital gold, Bitcoin, in a period of high inflation. As a result, the analytics firm notes that the digital gold story was premature.
As Arcane Research points out, the crypto winter was essentially fueled by tightening macroeconomic conditions and crypto-specific leverage and miserable risk management by core market participants. BTC tracked the US stock markets due to its high correlation.
“Apart from two different events in 2022, BTC closely followed US equities. The two peaks of June (3AC, Celsius etc.) and November (ftx), are responsible for BTC’s entire underperformance against US equities,” the report states, displaying the following chart.
Bitcoin predictions for 2023
For the coming year 2023, Arcane Research expects the contagion effects to continue ‘likely’ in early 2023.[B]but we think it likely that most of 2023 will be less hectic and verging on boring compared to the past three years,” predicts Arcane Research.
With that in mind, the company expects Bitcoin to trade in a “largely flat range” in 2023, but to end the year with a higher price than at the beginning.
Bitcoin’s current draws are very similar to bear market patterns from previous cycles, Arcane Research reveals. While the 2018 bear market lasted 364 days from peak to end, the 2014-2015 bear market lasted 407 days. The current cycle is on its 376th day. This places the ongoing bear market right between the durations in both previous cycles.
“If a new bottom is reached in 2023, this will be the longest-lasting BTC draw ever,” the company said, further explaining that there are quite a few potential catalysts for a reputable bull market:
The FTX process may drive faster regulatory progress, and we view both positive signs related to US spot BTC ETF launches and more coherent classifications of tokens as a plausible outcome towards the end of the year, with exchange tokens particularly vulnerable for potential safety ratings.
As for Grayscale’s Bitcoin spot ETF application, Feb. 3 will be an important date for the industry when the three-judge panel will rule on the SEC complaint.
In addition, Arcane Research expects another catalyst from Europe: namely the passage of the MiCA law by the European Parliament in February 2023. The core prediction for 2023 remains that Bitcoin will recover despite the tightening macroeconomic situation and that is now “an excellent area”. to build gradual exposure to BTC.”
However, the start to 2023 could be bumpy as trading volumes and volatility ease in a much duller market than in the past three years. In summary, Arcane Research therefore estimates:
As we enter the next year, patience and long-term positioning will be key.
At the time of writing, BTC price was trading at $16,497, facing further downward pressure likely due to tax revenues towards the end of the year.
