The year 2023 is off to a better start for Bitcoin and the broader crypto market than last year. Although most crypto prices are still trading in tight and tight ranges, BTC has at least shown a year-to-date performance of 1.55% and Ethereum 4.5%.
However, as QCP Capital writes in the latest market analysis, there are early signs that crypto investors should beware. While gold prices are currently performing very well, trading companies are raising the question of whether this will continue if the expected wave five of the USD rally takes place based on Elliott wave theory.
According to the theory, the fifth wave is the last leg in the direction of the existing trend. And a resurgent USD could mean further price loss not only for gold but also for Bitcoin and crypto. As QCP Capital elicits, it remains to be seen whether this will impact other alternative asset classes as well.
Currently, the total liquidity in the market, which is measured by M2 annual growth money, has shrunk to 0% for the first time in history. “Not to mention the liquidity in the crypto itself which is a smaller factor,” the company said based on the chart below.
7 / And overall liquidity, measured by M2 YoY growth, has shrunk to 0% for the first time in history! Not to mention the liquidity in the crypto itself which is a smaller factor pic.twitter.com/grwcAdPLn6
– QCP Capital (@QCPCapital) January 4, 2023
Price Targets For Bitcoin And Ethereum
However, Bitcoin and Ethereum are on a catch-up rally at the beginning of the year, as is gold. Despite the mini-rally, BTC is still trading in a very tight downward wedge, with 18k as the key breakout level on the upside, according to the firm.
In the medium term, $28,000 looks more key – as the head and shoulders neck line, and the 61.8% fibonacci retracement level from the $3,858 2020 low to the $69,000 2021 high.
According to QCP Capital, Ethereum “remains more bullish than BTC,” although ETH is also trading in a consolidation pattern. Investors should monitor the top of the triangle at $1,400 now, before the main resistance zone between $1,700 and $2,000 can be targeted. On the downside, the company expects $1,000-$1,100 to be excellent support.
Macro Outlook For 2023
It should be determined that 2023 will be a continuation of 2022 will be a macro environment. QCP Capital believes that inflation in the US will decrease significantly, but not enough to reach the Fed’s 2% target.
This will cause the Fed to delay rate cuts as much as possible, because Jerome Powell does not want to be the person responsible for making the same mistakes as in 1970-80 when there was a “double inflation era.”
This will cause the Fed to develop a “blinkered” mentality to better numbers and make more mistakes by easing monetary policy too late. “In their sad fate, they will wait too long and have to overdrive again,” the company said and concluded:
We expect this can only come in Oct-Nov again this year, but remain open minded to the market below quickly from that.
At press time, the price of BTC stood at $16,847, seeing a slight gain of 0.59% in the last 24 hours.
Featured images from Pierre Porthiry-Peiobty/Unsplash, Charts from QCP Capital (Twitter) and TradingView.com