2022 has gone down in blockchain industry history as one of the tensest years. With significant companies going bankrupt and distrust entering this sector, the major cryptos experienced a major correction. When looking at the primary cryptocurrency, Bitcoin (BTC) lost 66.8% of its market capitalization.
However, bears were even harsher on altcoins. Ethereum, a cryptocurrency that loses capitalization only to BTC, has lost 70% of its market price in the past 12 months. ETH’s competitors have also suffered in this market. To illustrate, Cardano (ADA), while remaining in the top 10, experienced an 82% drop in its price on the crypto market. With the expectation that we will abandon this pessimistic scenario with the arrival of the new year, let’s check out what we can expect for three cryptocurrencies, according to some market analysts.
Bitcoin Analyst Michael van de Poppe is optimistic about the primary cryptocurrency.
Even in his forecast for 2023, the strategist predicts that crypto could skyrocket and double its market capitalization. However, to do so, Bitcoin would have to beat the $20,600 mark. At the time of writing, BTC has struggled to hold above $16,000 and has resistance at $18,600.
Ethereum Coin Bureau analyst “Guy” has grand expectations for the leading smart contract platform. If Van de Poppe’s target is reached, the cryptocurrency will trade at $38,500. According to the trader, this could be the target at which liquidity will come in for Bitcoin in response to bulls’ strength.
In 2023, Ethereum holders will likely witness the arrival of the Shanghai upgrade, allowing Ethereum holders to take ETH out of the staking contract and use it in any way they like. Guy believes this could be a suitable catalyst for the cryptocurrency, as it could encourage other people to stake Ethereum by seeing billions of dollars unlocked.
However, the analyst decided not to make a price prediction for the altcoin. He said that while it is possible that flippening will happen and ETH could reach five digits, he believes that the cryptocurrency will trade sideways next year. There is a high probability that Cardano will grow in the stablecoins, non-fungible tokens (NFTs), and decentralized finance (DeFi) sectors. Cardano Closing, the list of predictions, is Ethereum’s only competitor that has remained in the top 10 throughout 2022.
Crypto enthusiasts trust that this can reflect in the capitalization of the smart contract platform. For Cardano’s price prediction, there is a tool from crypto exchange Changelly that helps to get an idea of what might happen in the future.
Looking at the performance of ADA in recent years, and if history repeats itself, 2023 may be a good year for those who bought Cardano in the downturn.
In Changelly’s analysis, the target for the Ethereum killer is $0,45 next year. Should things get even better, bulls can stretch Cardano’s capitalization until it reaches its peak price, $0,55.
30 Day Correlations
Report to Arcane Research, and the global markets have all fallen strongly correlated this year. The “30-day correlations” is an indicator that measures how in-tune Bitcoin has been with another asset in terms of price movement over 30 days.
When the value of this metric is more significant than zero, it means there has been a positive correlation between BTC and the other asset in the past month. On the other hand, negative values imply that the price of the crypto has been reacting to changes in the value of the different assets by moving in the opposite direction.
Also, the higher the metric value (in either direction), the more the degree of the correlation. Naturally, the metric has a value equal to zero suggesting the two prices aren’t tied to each other at the moment.
Now, here is a chart that shows the trend in Bitcoin’s 30-day correlations with Ethereum, S&P 500, and Nasdaq over the past year:
It looks like the metric’s value corresponding to ETH has been very high in recent weeks | Source: Arcane Research’s 2022 – Year in Review
As the above graph displays, Bitcoin positively correlated with these three assets during 2022. BTC’s correlation has been around or above 0.5 for most of the year for the US equities, suggesting it has been decently tied with them.
The correlation with Ethereum, however, has been at values of around 0.9 or more, implying Bitcoin has been highly correlated with it. Even now, as the year’s end, the correlation between these cryptos stands at 0.97, around ATH levels.
In September of this year, ETH successfully finished its much-anticipated transition to a Proof-of-Stake consensus system, an event known as the Merge. Since the Merge brought some developments unique to Ethereum, the correlation with BTC dropped, as is apparent in the chart.
However, it was only a short time before the two started moving on the same wavelength again, so even the Merge wasn’t enough to cause sufficient impact to separate the coins.
Also, since Bitcoin is highly correlated with stocks, so is Ethereum. Though, Arcane Research expects that this correlation between the cryptos and the US equities will soften in the next year due to trading volumes in the crypto market declining substantially.
ETH seems to have gone down recently | Source: ETHUSD on TradingView
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