Bitcoin Sheds $30K of Its Price in 2022. Buy at a Discount?
Low-Volume Trading as 2023 Knocks on the Door.
On January 1st, 2022, Bitcoin was changing hands at $46,600 and now, with just 1 day left in the same year, you can own 1 full Bitcoin for just $16,500. Should this be treated as a ‘doomsday’ event, where we anticipate a total BTC apocalypse? Or an opportunity?
Let’s think about that for a moment. When BTC was trading near All-Time Highs, traders and investors across the globe were flocking to buy it, thinking it will go to the moon and beyond. But now, literally, the same product is trading just above $16K and nobody wants to buy it.
If we would be talking about anything else than Bitcoin (or crypto in general), a discounted price would be viewed as good news. Let’s say you want a new phone that costs $1,000 – you like everything about it but it’s too expensive. If you would see that exact product at $300, wouldn’t you jump on the opportunity to buy it? Heck, you might even buy two of them.
This logic doesn’t seem to apply to BTC and the rest of the crypto market. That’s probably because people fear the reason behind the ‘discount’. If the said phone drops from $1,000 to $300, it could be due to a fire sale, Black Friday, or any other marketing reason. But that phone is not an investment whereas Bitcoin is (or at least considered as such by many).
And when an asset loses the trust of investors, it’s very hard to gain traction. Fear prevents people (and companies) to dive in head-first and say “Wow, what a great opportunity to buy crypto”. Call it market sentiment, call it a risk-off environment – in the end, it’s all just fear of loss. It’s the opposite of FOMO (Fear Of Missing Out) and it makes it very hard for that asset to rally. But 2023 is just around the corner and it could be viewed as a fresh start.
Technical Outlook – BTC/USD
The pair has been traveling sideways since the FTX crash and it looks like BTC will end the year in a tight range. At the moment, it is trading at $16,470, with resistance sitting at $17,000. The 50-day Moving Average is just above the price and together with the $17K level, will provide a relatively strong barrier.
The pair’s next direction is difficult to anticipate with accuracy, mainly because volatility and volume are low at the moment. Low volume increases the probability of false breaks because the moves made in such an environment could be easily reversed once volume comes back to normal.
A cautionary approach is recommended for what’s left of this year and the early days of 2023. With that being said, we wish you a Happy New Year and happy trading in 2023!
