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As 2022 draws to a close, the Bitcoinist staff decided to launch this Crypto Holiday Special to provide perspectives on the cryptocurrency industry. We speak to several guests to understand the highs and lows of cryptocurrencies this year.
In the spirit of Charles Dicken’s classic A Christmas Carol, we look at cryptocurrency from different angles, see its possible trajectory towards 2023, and explore the different industries that could underpin the future of finance. Find common ground in views.
Last week, we spoke with the agency about their perceptions for 2022 and their outlook for the coming months.Start a round of experts material indexis a market data and analytics company specializing in building trading tools for emerging sectors.
Key Metric: “tradfi (traditional finance) prices have yet to confirm the last leg decline in earnings contraction (by Q1 2023), but sentiment is already close to bottoming out. .”
Material Indicators and its team of analysts are dedicated to measuring market sentiment and liquidity, filtering out the noise and providing a clear view of the state and possible directions of what big companies are doing. I try to read between the lines. This is what they told us:
Q: What are the most important differences for the cryptocurrency market today compared to Christmas 2021? Has it changed? Are penetration and liquidity declining? Are the fundamentals still valid?
A: The difference is clear! Since the FTX explosion, the influx of new people to Crypto Twitter has decreased slightly.Salty Youtubers advise selling your remaining coins to avoid a complete loss. The Telegram community is shrinking. The big accounts that encouraged their followers to buy either stopped or rebranded. The final leg down of tradfi’s (Traditional Finances) earnings contraction (~Q1 ’23 Q1) is yet to be confirmed, but sentiment is already close to bottoming out.
Q: What is the dominant narrative driving this shift in market conditions, and what should be the narrative today? What do many people overlook? We have seen massive crypto exchange failures, hedge funds that were considered unruly, and ecosystems that promised a financial utopia. Are cryptocurrencies still the future of finance, or should the community pursue a new vision?
A: It’s the other way around. Conditions create stories. Loose monetary policy and abundant cheap credit create bubbles that encourage fraud. You can only see people swimming naked when the tide is low. With an imminent rise in unemployment, people will try to hide in bonds. This actually improves the credit quality of risk assets. So while profit-driven assets feel the pain of rising unemployment, credit-driven assets (risk assets) feel relatively painless.
Q: If you had to pick one, what do you think will be the key moment for cryptocurrency in 2022, and will the industry feel the impact during 2023? Where will the industry be next Christmas? Do you think it will survive this winter? Mainstream is once again declaring the death of the industry. Will they finally get it right?
A: Terra/Luna was probably the catalyst for all subsequent detonations, and we have yet to see the full impact of the contagion (DCG/Grayscale/Genesis not fully resolved yet). Like all turmoil, this will only lead to more regulation without protecting investors or increasing growth potential. We wanted to hire an institution, but now we see zero risk management and wasting user funds on gambling.
Q: Finally, across social media, you at Material Indicators have exposed your bearish bias. Are you more or less pessimistic compared to early 2022? And what would you like to see to shift your bias and lean to the long side of the market? But are pivots and rising low interest rates more likely?
A: We’re not completely out of the forest yet, but we’re already seeing most of the light. If earnings are low and forecasts are poor, bonds are likely to be auctioned in Q1 2023, so credit can be provided to risky assets to help limit declines or aid recovery ( (especially if the Treasury were able to relax about $2 trillion of idle RRP). Liquidity). Bitcoin can also benefit from this, as it depends solely on the availability of credit, not earnings. is unlikely to be the last. So be wary of a possible resurgence of inflation in late 2023/early 2024.
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