Bitcoin BTC Towards A Return To Sunny Days In January 2023?

The year 2022 does not really offer any respite in the crypto market. Even as the tipping point approaches, it keeps the entire ecosystem on alert. 2023 may prove to be more lenient, especially for bitcoin (BTC), which has suffered from the violent market debacles. In fact, bad weather continues to hit the queen of cryptocurrencies. Let’s see together if next January will bring more clarity to the currency created by Satoshi Nakamoto.

The current analysis is prepared in collaboration with Bitget’s crypto exchange platform. Bitget is present in more than 100 countries and is an exchange of cryptocurrencies created in 2018. With a user base of more than 8 million, the digital asset platform offers a range of services to its clients. These include derivatives trading, spot trading, social trading and copy trading. Thanks to its innovative products, Bitget appeals to both amateurs and professionals.

Growing pressure on CEXs

The news about CEX (Centralized Exchange) is not the most brilliant this year. Thus, the CEX universe is marred by successive scandals such as FTX.

The specter of contagion hangs over the entire cryptosphere. As a result, more and more users decide to follow the popular expression to the letter “Not your keys, not your coins”. In other words, cryptos are removed from CEXs for DEXs (decentralized exchange) or hard wallets.

Some see proof of reserve or Proof-of-Reserve (PoR) as the holy grail that will restore user confidence. This is the case with Binance, which presents it as a promise of its solvency.

However, it must be said that PoR does not include negative balances, in other words debt. They are therefore partially transparent and cannot provide a complete picture of CEX’s solvency.

Binance continues to make waves

Recently, Binance has been in the news. Thus, the platform is at open war with the Kraken. In addition, CEX faces massive withdrawals at the end of the year. Additionally, Mazars’ announcement to suspend PoR audits of its crypto clients didn’t help matters.

Data provider Glassnode compared evidence of Binance’s self-reported reserves of 359,300 BTC and its total holdings, which it estimates at 584,600 BTC. We can therefore deduce that the first CEX is not the champion of transparency.

Binance’s set of cryptos in reserve is as follows:

As if all this wasn’t enough, Binance has to face a complaint from 15 French investors. Things are no better on the other side of the Atlantic. According to the CoinGeek editorial staff, Binance.US Binance.com is not operated independently of either entity.

The famous CEO of Binance, Changpeng Zhao aka CZ, stepped forward to discuss the reasons for the hostility towards the world’s leading exchange. In an armada of tweets, the platform blames the outside world for rumors of its insolvency.

Bitcoin (BTC) at the bottom of the wave?

The timing of all this news surrounding CEX, and Binance in particular, is far from favorable for bitcoin (BTC). As an illustration, the price of the queen of cryptos is not at its best:

Since the announcement of Binance’s massive withdrawals, the price of BTC has struggled to rise, so much so that one wonders if it hasn’t reached the bottom of its fall.

January 2023 could confirm this trend in the speed at which the price is moving. In such a case, when one reaches the bottom, the only alternative is to rise to the surface.

Volatility as a harbinger of the rally

Volatility decreases in the last quarter of the year. In the month of December, bitcoin (BTC) experienced the lowest volatility since the start of the bear market. In fact, the last time bitcoin (BTC) experienced this level of volatility was in October 2020:

Let’s take a closer look at what such a level of volatility translates to bitcoin. Perhaps one of the most popular tools among traders is Bollinger Bands. Developed by John Bollinger in the 80s, they are based on volatility, which is cyclical and predictable.

Specifically, they consist of three curves, the middle one representing a simple moving average over 20 periods by default, an upper curve, and a lower curve, each set at 2 standard deviations from the moving average.

The narrowing of the bands indicates low volatility (M-shaped figure). On the contrary, the distance between the bands denotes a high volatility environment (W-shaped figure). This indicator helps to detect trend reversals.

Furthermore, according to Bollinger, periods of low volatility precede periods of high volatility and vice versa. Additionally, a low volatility environment is conducive to consolidation. In other words, the price is stabilizing just like bitcoin (BTC) at the moment.

We better understand traders’ current tendency to accumulate. According to Glassnode in its latest weekly column, the prevailing propensity to hold bitcoin (BTC) for the long term is increasing. Thus, 72.3% of bitcoins in circulation, or 13.9 million, are owned by long-term holders.

As a deja vu effect for bitcoin (BTC)

It has been 14 years since the inception of BTC. Despite the apparent youth of Satoshi Nakamoto’s currency, one cannot ignore its cyclical aspect.

In November 2018, a low level of volatility preceded a bear market. Likewise, history repeated itself in September 2020, low volatility preceded a meteoric rise in price.

Goldman Sachs analysts are of the same opinion. Also, CNBC confirms it as well. In reality, slower volatility is not necessarily a bad omen.

Finally

The year 2022 redefines the cards in the crypto ecosystem. Thus, it will leave an indelible mark until its term. However, variables such as volatility suggest the signal of a bull market. The parallel with the years 2018 and 2020 cannot be dismissed out of hand. If the bottom price trend is confirmed, the outlook for the start of the year is encouraging. What could be better than a trend reversal to enter a new year? This option to step back to bounce better could be a game-changer for bitcoin (BTC).

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Paola Same avatar
Paola same

As a financial professional, I consider blockchain a real revolution thanks to all its innovations, which have a global impact. It is with passion that I take part in this new digital era through my articles.

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