The year 2022 is drawing to a close and our staff at NewsBTC have decided to launch this Crypto Holiday Special to provide an insight into the crypto industry. We’ll be speaking to several guests to understand the ups and downs for crypto this year.
In the spirit of Charles Dickens classic “A Christmas Carol,” we’ll look at crypto from different angles, consider its possible evolution through 2023, and find common ground between these differing views of an industry that could support the future of finance.
Spilotro: “As an emerging technology, crypto hasn’t historically been as receptive to cycling’s valuation. But as it has become a larger part of the financial system, it now follows the rules of that system more than the community might like.”
We end this series with an internal guest, our editorial director Tony Spilotro. Dedicated to spreading knowledge and tools to anyone willing to listen, Tony keeps an eye on the market by encouraging critical thinking, going against the crowd and developing a methodical approach to trading.
Spilotro: “I am confident that the mainstream media is terribly wrong. In fact, the “magazine cover indicator” is one of the most proven ways to pick highs and lows in the stock market.”
Tony is a proponent of the Elliot Wave Theory, which is the price development of Bitcoin and has perfectly described crypto since the early 2010s. The market is about to take a critical path, but in which direction? This is what he told us:
Q: What is the most significant difference for the crypto market today compared to Christmas 2021? Beyond Bitcoin price Ethereum, and others, what has changed from that moment of euphoria to today’s perpetual fear? Has acceptance and liquidity declined? Are the basics still valid?
A: The biggest difference now compared to then is macro conditions and cash flow. The Fed’s tightening has served its purpose and has taken the bull by the horns, so to speak. Ned Davis Research had a rule, “Don’t fight the Fed,” and it proved true in the last year plus. As an emerging technology, crypto has historically not been as receptive to cycling valuations. But as it has become a larger part of the financial system, it now follows the rules of that system more than the community might like. The industry has been hit hard in recent months by the domino effect, compounded by the LUNA collapse and FTX fiasco. But Bitcoin and some others cryptocurrencies generally feel strong. Given how tough it is for many stocks out there, it’s remarkable how well such a speculative asset class is holding up. My belief in bitcoin is not shaken, but like everything else, it will continue to ebb and flow with investor enthusiasm.
Q: What are the dominant narratives driving this shift in market conditions? And what should the story be today? What do most people overlook? We saw a major crypto exchange explode, a hedge fund deemed untouchable, and an ecosystem that promised financial utopia. Is Crypto Still the Future of Finance or Should the Community Have a New Vision?
A: For me, time drives the narratives forward. The market will find a narrative when the time is right. The last narrative has been bitcoin as an inflation hedge and it has during the highest inflation has shown a terrible performance for years. Narratives are very often wrong – but we all fall for it again and again. The next narrative will likely be overly euphoric, ultimately leading to its destruction as the mood tide turns. I turn to a few things again. Crypto is a nascent technology where we’ve barely scratched the surface of what’s possible. Even the internet is still early in its design compared to highways or railroads. Crypto is a newborn in comparison. Much like the internet before it, it’s easier to fall prey to larger market sentiment and narratives when people don’t fully understand it. The dot-com bubble is a great example. Much like all the other cases where Bitcoin has been declared dead, it does nothing more than shake off the unbelievers and suck up those who are willing to believe. Unfortunately, I don’t think we’re headed for financial utopia, rather Bitcoin will become our best bet to retain ownership over value. I think it’s going to be the digital version of money in the mattress.
Q: If you have to choose one, what do you think was a significant moment for crypto in 2022? And will the industry feel the consequences by 2023? Where do you see the industry next Christmas? Will it survive this winter? The mainstream once again declares the death of the industry. Will they finally get it right?
A: The most significant moment for crypto in 2022 had to be the FTX situation, although one could argue that without LUNA’s previous collapse, this would never have happened. I think the industry will feel the impact of the fallout for years to come and beyond. Comprehensive regulation should take place, wiping out many shitcoins. Rules are introduced so that no company can raise capital a’la FTT token. Some innovations will stifle, especially around DeFi and Ethereum. Scarcity and stronger fundamentals of network use will decouple from the rest of crypto. I’m confident that the mainstream media is getting it terribly wrong. In fact, the “magazine cover indicator” is one of the most proven ways to pick highs and lows in the stock market. When the mainstream media starts covering it extensively, the mood is usually extreme.
Q: What was the best indicator to watch in 2022 and what indicators are you keeping an eye on for 2023? We know that you have based many of your analyzes on the Elliot Wave theory; according to this theory, what can market participants expect in the next year?
A: The best indicator for 2022 was the weekly Ichimoku cloud. The moment BTCUSD broke out of the Ichimoku cloud, the lights went out for the bulls and a deep decline ensued. Admittedly, this came after bitcoin lost some value – it was confirmation that the bull run was over for some time. I should have given that more weight, especially after seeing how Bitcoin behaved after losing the cloud in March 2020. Elliott Wave Theory balances price patterns that the crowd doesn’t often look for – like zigzags or flats – with price extremes and, more importantly, sentiment extremes.
I’m a big lateral thinker in general and I go by the nickname Tony “The Bull” so overall I’m biased bullish on BTC. When the crowd is bearish, I feel safer when I’m bullish and vice versa. Still, I’m bullish on BTC for one last rally. I’ve been building positions for the past 1-2 years in anticipation of what I believe will be a shocking wave 5 for Bitcoin and the entire cryptomarket capitalization will be.
BTC price is moving sideways on the daily chart. Source: BTCUSDT trade view
Just when everyone is getting bullish again and we’ve hit ridiculous new highs, I’m going to temporarily retire Tony “The Bull” and turn my attention to the biggest crypto bear – because that’s the grand finale for some time, IMO.
Source: Crypto News Deutsch