So far, the value of the whole cryptocurrency market has dropped by about $13000 - roughly equivalent to the sum of the stock market values of Amazon and Google, which also indicates that cryptocurrency is still in its infancy. In this case, cryptocurrencies are likely to exceed most traditional assets.

How will cryptocurrencies change in 2023?

So far, the value of the whole cryptocurrency market has dropped by about $13000 - roughly equivalent to the sum of the stock market values of Amazon and Google, which also indicates that cryptocurrency is still in its infancy. In this case, cryptocurrencies are likely to exceed most traditional assets.

The most aggressive tightening policy of the Federal Reserve in 40 years is undoubtedly one of the reasons for the shrinking value of cryptocurrency market, but the Federal Reserve may consider policy changes - after all, if they do not turn to loose policies, they may fall into recession, and all risky assets will be affected. When the Federal Reserve turns around in 2023, three crypto markets "musketeers": Bitcoin, Ethereum and the US dollar stabilize currencies. The macroeconomic bear market may push Bitcoin to the support of US $10000 and Ethereum to US $10000, which means that these two crypto currencies are likely to fall further. However, as the Federal Reserve turns to loose policy, the two cryptocurrencies are bound to recover.

In 2023, the key support level of Bitcoin will be $10000 and the resistance level will be $40000. If the economic rules work, the supply of Bitcoin will increase the certainty of "halving", and the rising demand and adoption should push its price up over time. In the long development track of Bitcoin, there are indeed some bumps in 2022, which may even fall to about $10000, but Bitcoin is still rising and may return to the resistance level of $40000.

Bitcoin supply decreases, adoption and price increases

In 2023, the support level of Ethereum may be between 10000 dollars. Ethereum upgraded in 2022 and successfully turned to the PoS consensus mechanism. These milestones have had an impact on its price performance. In the case of the global market downturn, we can see that as the cryptocurrency with the second largest market value, the price has fallen sharply. Even so, Ethereum is expected to continue to surpass Bitcoin and stocks in 2023. From December, the key support level of Ethereum will reach 1000 dollars. If the support level is broken, it may lead to more stop loss selling, and Ethereum may experience a painful period again.

Can't Ethereum and the US dollar stabilize the currency and stop the trend of token? If you look, if you look at CoinGecko's ranking of crypto assets, you will find that three of the top five cryptocurrencies are US dollar stable currencies. Due to the underlying technology of Ethereum, it is possible to trade the US dollar in a 24/7 all-weather manner with near instant settlement and low cost. In the long run, few people can prevent this advanced technology from being applied to financial services such as futures and exchange traded fund markets.

In addition, NFT and Hehe decentralized exchanges are also promoting the sustainable development of Ethereum. Usually, when the risk index hits the bottom, it basically indicates that the recovery of the Crypto Index has exceeded the stock. However, since November, the sharp decline of crypto assets seems more like an indicator, which also triggered and promoted the sales of most other risk assets (especially stocks and commodities), because investors may want to stop losses in time.

Without a compliant spot Bitcoin ETF, the impact of FTX bankruptcy will further deteriorate. The FTX bankruptcy highlights the urgent need for the United States to have approved spot Bitcoin ETFs, which, according to the Securities Act of 1933, deposit Bitcoin in compliance custody institutions such as Fidelity. For all that. ETF will not prevent Bitcoin prices from falling, but it will certainly not prevent investors from withdrawing money. Considering the ability of American market makers, even if a large cryptocurrency exchange fails, the ETF price may not be affected, so the price of Bitcoin will continue to be closely tracked.

Bitcoin ETF may avoid the recurrence of FTX crisis. With the intensification of market volatility, the premium and discount of spot Bitcoin ETFs outside the US market can be kept at a relatively low level. GBTC deviates from Bitcoin ETF to form an envious contrast. Approving spot Bitcoin ETF investors can also avoid using the private letter of over-the-counter transactions and the impact of large fluctuations in Grayscale Bitcoin Trust (GBTC).

With the increase of volatility, the price difference between the highest premium and discount has increased slightly, which is basically not affected. In contrast, the net discount of GBTC is up to 40%. Bloomberg Intelligence believes that the net value difference of spot bitcoin ETFs listed in the United States during the fluctuation period will be smaller than that of similar products in Europe or Canada, because the liquidity of the U.S. market is much higher.

Concerns about Genesis in the market and the delayed approval of spot Bitcoin ETFs have led to a significant discount of grayscale GBTC. Because the market is increasingly worried about Genesis's bankruptcy, the discount of Grayscale Bitcoin Trust has expanded to a record 50%, which means that investors can buy Bitcoin at half of the market price. The bankruptcy of cryptocurrency exchange FTX may further hinder the recent approval of the US Securities and Exchange Commission to convert GBTC into Bitcoin spot ETF, but it may stimulate the strengthening of the supervision of cryptocurrency market.

The delayed approval of gray scale application for Bitcoin spot ETF has led to the continued expansion of GBTC discount. According to the statement of Gary Gensler, the chairman of the Securities and Exchange Commission of the United States, it is unlikely that GBTC will be converted into spot bitcoin ETFs in the short term, not only that, because of the collapse of FTX, rapid approval of other spot ETFs further reduces the possibility of bitcoin based on futures. ETFs and other substitutes around the country are nibbling at the demand of GBTC market. Not only that, but the expansion of GBTC discount also shows that the market is less likely to turn to spot Bitcoin ETFs. The failure of FTX may also lead to the failure of the Securities and Exchange Commission (SEC) to re-examine the supervision and adjust the regulations on the conditions for approving ETFs.

Although Gray Bitcoin Trust holds Bitcoin worth about US $10.5 billion, its market value is only US $5.5 billion due to discounts. At its peak, the fund held crypto assets worth about US $43.5 billion. Many people who buy discount GBTC want to know the potential return. Discount GBTC provides investors with Bitcoin exposure lower than the market price. When GBTC trades at a premium, investors need to pay twice the market price to obtain cryptocurrency through the fund.

ending

Unlike ETFs, GBTC shares cannot be created or destroyed, so they cannot be arbitraged through Bitcoin prices, resulting in their prices changing independently of Bitcoin prices, leading to significant premiums and discounts. The data shows that GBTC has changed from 100% premium to 50% discount, which may seriously damage the return of investors. In this case, cryptocurrencies are likely to exceed most traditional assets.