2023 Crypto Analysis (Pay Attention to these Themes)

Over the last 10 years or so ever since Bitcoin started to beat the index time after time, the amount of publicly accessible information about cryptocurrency grew exponential. The information that were used to be obscure and hidden is now free and abundant. Perhaps the entire crypto movement in general is a foreshadow to DeFi. In the past, we had to look through multiple sources to get a vague sentiment of how the market is. Now, we have plenty of aggregated news and all sorts of technical charts being thrown in our faces.

However, are we actually better informed?

We have an inkling of the looming themes in the first half of 2023. The topics range from Silvergate collapse, Mt. Gox 142,000 BTC unlock, Shanghai Upgrade ETH withdrawals, tons of macroeconomic shifts and a tighter regulatory crypto clampdown. Even as we know these information, are we necessarily making better decisions? Sometimes yes. But often, the answer is no. Even though information is readily available now, much of it are regurgitated news that turns into fluff as easily as ice turns into water. We’ve heard of them, whether it is from crypto twitter (CT), from some of the gossipy Telegram groups that we’re in, from the crypto media news, but we don’t know much about them.

We have no lack of crypto news, but a lack of an analysis about them.

Crypto runs 24/7, and there are many juicy stories happening all the time. But there are very little moments when we actually know how to seize trading opportunities after spending a couple of minutes on these juicy stories. I’m for the idea that a story is merely entertaining, and only useful if we can actually answer the following questions: Which coin(s) is related to this piece of news? What are the top 3 reasons why I should buy this coin? When is a good time to buy? When is a good time to sell?

Everyone knows that Ethereum has the highest user activity and ETH will become deflationary, yet some would rather buy ETH at a more expensive price than others.

Everyone knows that there will be a Shanghai Upgrade resulting in a large influx of liquid ETH in the market, yet not many people are aware that Ethereum’s withdrawal period is dynamic based on how many validators are exiting at a given time. Validators must go through 2 stages: the exit queue and the withdrawal period. When you do the math in regards to the variables involved: the full number of validators, minimum churn limit, set at 4 and the churn limit quotient, set at 2¹⁶ (65,536), you’ll come to the conclusion that even if 1/3 of the entire validator set were to try and exit in one day, it would take a minimum of 97 days to complete the entire withdrawal process. Furthermore, over 60% of staked ETH is currently at a loss, representing 10.3m ETH. Given that ETH has dropped over 65% from its all-time high, and the confidence in various liquid staking deriatives (LSD) rising over +300% over the last 3 months, any sudden big red candle is likely to be absorbed by potential new ETH stakers after the Shanghai Upgrade. Oh, did I mention about LSD? Like I said, everyone knows about the Shanghai Upgrade, yet the notion of placing a couple of conservative bets (E.g. Lido) did not even cross their minds.

We hear about the news, but we don’t know much about them.

We don’t need more people to work on distributing the same piece of news. We need more people to work on producing insightful analysis from the piece of news. Everyone knows that the interest rate will continue to rise, but not many people knows that the market futures view four additional rate hikes as the base case with a 13% probability of rates rising to 6% or higher. The probability of a 50bps rate hike next FOMC is now 26.2%, but just a month ago, the odds were less than 0.2%. Besides being engrossed in how a trader managed to short Silvergate’s stocks and turn $13,000 to $1,300,000, we’re better off spending time to strategise our trading plans in lieu of the CPI data on 14 March which is likely to influence the Fed’s decision on the 22nd.

Numerous SEC-related headlines has popped up over the last 6 months, yet ironically Hong Kong strives to open up to a be a crypto-friendly hub this coming June (hint: Chinese related coins were on a pump, and might continue to do so depending on what will be announced). Generally, things aren’t looking exactly the best in crypto land. One of the more conservative players right now would be DCA-ing into BTC / ETH whenever it drops by over 4% in a single day. As the saying goes — “Slow is smooth, and smooth is fast.” At the end of the day, many of us are here to make more money. We’re better off being informed about the direct indicators (E.g. 200 EMA, 200 MA, Funding Rates, Fear & Greed Index, etc.) which will impact our trading decisions than to hop onto the next trending news each time it appears. Unless it is an analysis of the news, the news that you’re latching on is more likely an entertainment than an education. Let’s not allow the headlines to cause collateral damage and rekt our portfolios. Stay safe, my friends.