Bitcoin climbs higher, but 2023 could still be volatile

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Bitcoin prices to start the new year have tilted slightly higher. However, this could be another volatile year for the cryptocurrency market as it slowly limps into 2023.

“Cryptocurrencies have snuck into the new year, licking their wounds after the carnage of 2022,” Reuters reported. “Global crypto market capitalization is up 5% to $871 billion since January 1, but is still down more than 57% from the same time last year.”

At the end of 2022, bitcoin was stuck in a lateral movement trap. Volatility has been relatively calm, but this could just be the proverbial calm before the storm.

“Bitcoin itself has gained 4.3% since the start of 2023, despite being stuck in a tight range between $16,500 and $17,300,” the report adds. “The world’s largest cryptocurrency is oddly subdued, with its 7-day volatility falling to levels not seen since October 2018, according to data from Refinitiv Eikon.”

Patience is required

As the cryptocurrency market enters a maturing phase, especially after the hard knocks of the past year, the days when quick and easy gains could be had are over. Analysts are preaching patience in a cryptocurrency market that could be heading for another year of fluctuating price movements, an environment where patience is indeed a virtue.

“It will be a year for the patient, as we do not expect prices to approach any old all-time highs in 2023,” Vetle Lunde, principal analyst at Arcane Research, said in the same Reuters report.

One of the biggest indicators of upside and even downside potential is trading volume. Cryptocurrency trading volume activity could provide some insight into what to expect for 2023, and at present, volumes are relatively stable, as reported by Reuters.

“Cryptocurrency spot trading volumes also remain weak after falling about 48% in December from the previous month to $544 billion, their lowest level since December 2019, according to data from CryptoCompare,” reported Reuters.

This is not a surprising move considering last year’s decline in the crypto market, which could have essentially provided the digital asset market with some much-needed cleaning. Given the bull run of 2021, speculation was reaching fever pitch, especially with the influx of institutional money.

That said, a new type of investor could emerge amidst the chaos. One that focuses on bitcoin or other cryptocurrencies as a long-term growth option, as opposed to an overnight moneymaker via high-speed trading which could be good for the crypto market so that it survives in the long term as a viable asset alongside stocks, bonds and other traditional asset classes.

For more news, insights and analysis, visit the Crypto Channel.

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