There’s no getting away from the fact that 2021 was the Year of Crypto… and 2022 wasn’t. In 2021, crypto exploded in value. For years, people wondered if Bitcoin would ever again reach its 2017 all-time high. In 2021, it tripled it. And we just closed out a year when Bitcoin withdrew back to less than it was worth at the 2017 peak.
Of course, we know by now if you smooth out the peaks and valleys and just look at the trend line, the performance of crypto as a whole has still been nothing short of incredible.
But more importantly, it’s worth keeping in mind that nothing really did well in 2022; the economic aftershocks of the pandemic, which we were able to stave off in 2021, caught up with everything. And since it took us this long to get here in the first place, it’s taking a long time to get out.
It’s totally unavoidable in the present economy. Year over year, the S&P 500 is down by almost 20%. Since so much of the market is steered by massive investors who are diversified across different asset classes, broader trends can have an overwhelming impact on individual assets regardless of what’s really happening in them.
The good news is, I expect 2023 to bring better things for the crypto market. Much better things – and bigger profits.
We’ve got a lot going for us – and a lot that points to profits ahead in the year ahead…
The Forces That Will Lift Crypto in the New Year
The first is very broad. And – surprise – it’s the pandemic. It took more than a year for the full extent of the problems to appear, and it’ll take more than a year for them to resolve, but we are over the acute, crisis phase, and the economy is finding its equilibrium. The world, for most intents and purposes, is moving toward a new normal.
Secondly is the historical precedent that tells us bear markets never last forever, and bullish “animal spirits” always run again. When it comes right down to it, investors may be risk averse, but they also crave opportunity. They can’t sit on the sidelines forever.
Crypto declined at the very end of 2017. It started climbing again in the first quarter of 2019. In late 2019, it had some trouble, but in early 2020, it started seeing gains, and by the end of that year, it had seen the start of the rally that would take it all the way up to its 2021 heights.
The pattern I’ve identified is that crypto bear markets have never lasted more than 415 days so far. With the current bear market in crypto starting back in November 2021, it’s not an ironclad law of the universe, but it would be unprecedented if the current bear market lasted past the first few months of 2023.
Finally, there is one very specific catalyst that I predict will soon be lifting a massive weight off of the crypto sector. You might even say it’s a mountain-sized weight.
The issue is the lingering fallout from Mt. Gox. The exchange folded the better part of a decade ago, but we’re still feeling the effects because investors dating all the way back to that time are still waiting for legally mandated reimbursements for lost Bitcoins.
Mt. Gox collapsed in 2014, so these investors could have bought in when Bitcoin was worth, at most, $1,000. Theoretically, many of these people have become millionaires since then as their investments have multiplied several times in value.
But they haven’t had the chance to spend any of it. Some of them have almost certainly died waiting. That’s why I expect many of them to sell the second they get their Bitcoin, so they can enjoy the money that they were supposed to have years ago. After waiting all this time, “HODLing” forever is going to be the last thing on their mind.
When they sell, that’s going to drive down prices in the short term. The thing is, everybody knows this is coming. The Japanese government has already mandated it. Knowing that the massive sale is coming is going to motivate some investors to hold off on buying until after it happens.
But once it does happen, there won’t be any more reason left to wait. People buying the dip could be the catalyst to launch all of crypto back into a bull market.
I can’t be certain of what’s going to happen, but my expectation is that 2023 will be much better than 2022, and profit opportunities will be coming our way.
I’m going to be watching carefully for them, so keep an eye out!