From the FTX debacle to regulation and debt, there is a storm brewing for Bitcoin in 2023. Here are some of the events and factors you should keep your eyes on. Spoiler alert: not a lot of it has to do with BTC directly – it is exogenous – but it will play a role in the market.
FTX: The Elephant in the Room!
It is ridiculous how much a centralized Ponzi scheme can affect the most valuable decentralized asset out there. Therefore, anything related to FTX should not influence Bitcoin in 2023. Nevertheless, every time there is any kind of exchange failure, we see it reflected on BTC prices.
It happened with Mt Gox as well as with other less notorious exchanges. One plausible, rational explanation is that the “loss” of BTC triggers massive liquidations – especially if coins were stolen. The less rational explanation is panic: enough people see a big exchange going down for whatever reason and they liquidate their positions.
Either way, Bitcoin has nothing to do with this one. Everyone who buys into the space should know that if you do not hold your keys, you do not own your coins. Exchanges be damned! Nevertheless, BTC prices could drop further due to FTX holdings being liquidated to pay creditors or any other host of fiat world issues that are tragically imposed on this space.
S2F, is it Still Relevant?
Another indicator to watch out for is the S2F – stock to flow – model. Up until about a year ago, it seemed like BTC prices were fitting neatly into the model. Then prices started to decline beyond the lower band that Plan B set out in his S2F model – the one most people follow.
Will prices bounce back to a level within the range again? Is the downturn over and should we be buying everything we can? Maybe, maybe not. It is possible that S2F finally goes bust, like all the other fiat world thinking that is applied to Bitcoin.
Nevertheless, you should keep the model in mind. It has been more or less accurate before and could be one key indicator for Bitcoin in 2023 – Just do not take any of what we say as financial advice!
More Useless Regulation
Never let a crisis go to waste. That seems to be the operating logic of the powers above. Governments and international organizations, the guardians of the old order and the purveyors of dystopian visions for the future, will try to take advantage of the FTX debacle to introduce more fiat world thinking into the crypto sphere.
They will try, and they will probably fail, just like they have until now. Bitcoin cannot be regulated. On ramps – exchanges – that deal with fiat, and scams like FTX, are regulated.
Corruption stems from one side of the equation, that much is clear. Nevertheless, your normie friends will probably freak out and fall into the CBDC trap just because it is “safe” and “regulated’ while BTC is not. Who can blame them? There is nothing more terrifying than government and its powerful propaganda machine.
Once again, if you have your own keys and stay away from the on ramps that are subject to regulation as much as possible, you might be able to live with whatever dystopian financial nightmare governments and international organizations have planned for us plebs. In this regard, there are few hedging instruments out there that will be more valuable than Bitcoin in 2023.
Rising Interest Rates, Declining Economic Output, & Demise Through Debt
Another fiat-powered, government-bred abomination that will have an impact on the price of everything – including BTC – will be the inevitable collapse of debt-driven economic activity at every level, due to rising interest rates. A decade and a half of debt exuberance should also reaffirm the advantages of holding Bitcoin in 2023.
Chances are that the opposite will happen. When interest rates rise, money becomes scarcer. Consumption drops, unemployment tends to rise, and the risk of defaults on all types of loans increases.
Translation: there is less money to invest. Worst even, deleveraging can trigger sell offs. How many people leveraged themselves to buy BTC? How much is that leverage worth? How many will need to sell Bitcoin because they have other kinds of debt or lose their jobs and must cash out on their rainy-day fund?
Holding Bitcoin in 2023: Blessing or Curse?
These are some of the most notorious exogenous unknowns that will influence Bitcoin in 2023. If you read this and you are freaking out about your future and that of your coins, take a breath and think.
Holding Bitcoin in 2023 might be a blessing or it could turn into a curse. That applies to years past for anyone looking to profit in fiat terms. BTC is an alternative to the fiat system that has been coopted to serve the narrow interests of the elite. Just remember, the kind of corruption that created this apocalyptic economic situation we will all have to navigate this year, is fiat powered.