BTC's performance in other digital asset markets will be very bleak in 2022. At the beginning of 2022, BTC's current price is less than $17000, with a drop of more than 60% in the past year, and the price is about $46700. On January 1, 2022, BTC's market value also decreased from 900 billion dollars to 322 billion dollars at the end of the year. The following content will answer for you.
1、 Failure of price forecast model
The BTC price decline may be due to the deterioration of the economic environment and the special situation that the whole cryptocurrency market continues to this year. Various entities in the market have also made some price predictions on their price models. In the bull market cycle, one of the most popular forecasts is the S2F model forecast of analyst PlanB.
By the end of December 2022, S2F model predicted that the price of BTC would be 110000 dollars, but the actual price was far from it, which also caused people to question the relevant price models. Since S2F accounts for two asset related variables: inventory and liquidity, the model is usually used for pricing in traditional markets. "Inventory" refers to the total supply of assets, and "liquidity" refers to the supply of new assets created each year.
Antoni Trenchev, co-founder and executive partner of Nexo, a digital asset management platform, believes that "there are many factors affecting BTC prices, including market demand, regulatory changes and technological development. The S2F model is a useful model. BTC is a tool for forecasting future prices, but please remember that this is only based on some assumptions, not a guide for determining the future."
In addition to S2F, people also try to use other models to predict the price of BTC in the distant future. Although they are the theoretical basis of traditional financial markets, the success of BTC in price prediction is relatively limited. BTC has only been born for more than ten years. Compared with leading technology stocks such as gold and silver, cryptocurrency is still in a new stage of price discovery. Therefore, although there are various BTC price forecasts, it is difficult to apply them to existing models due to the limited availability of periodic data.
In fact, there are many different models and methods that can be used to predict the price of Bitcoin. Some people use technical analysis to study historical price and quantity data to identify patterns and trends. Or use fundamental analysis, which involves assessing the basic factors that may affect the demand and supply of assets. At present, there is no single model or method that can accurately predict. When BTC makes any investment decision, people need to consider a series of factors, such as the overall market environment.
Alex McCurry, CEO and co-founder of blockchain solution provider Solidity.io, said, "BTC is a completely unpredictable asset. The only thing BTC can determine is the basic value of the Internet and its value to holders and investors. Therefore, as time goes by, people can predict the long-term use and value in the macroeconomic climate, but it is impossible to fully predict the price at the exact time."
2、 Lightning network
However, there is another important aspect that can change the BTC price trend: the functionality of practical BTC assets is limited to payment, because it is not a network compatible with smart contracts. This situation is slowly changing, because BTC, with the support of Lightning Network, has found more utility than ever before. Lightning network is developing. The second layer payment protocol established on BTC can conduct transactions quickly and seamlessly. This will help greatly improve the scalability of the BTC network. MicroStrategy announced that it plans to release lightning network driver software and solutions in 2023.
As a strong supporter of BTC, MicroStrategy continues to buy BTC. The company purchased 2395 BTCs from November 1 to December 21, 2022 at an average price of US $17181, totaling US $42.8 million. For tax reasons, it sold $70.4 million of BTC on December 22 and received $11.8 million. However, the company quickly repurchased 810BTC on December 24 with $13.6 million in cash, worth about $2.2 billion.
3、 Derivatives market and price discovery
Although the price of Bitcoin is unpredictable, asset derivative markets can provide important indicators for its current and future emotions. The global investment manager Vaneck cryptocurrency forecast will be released in 2023, which claims that BTC may fall to $10000-12000 in the first quarter of a wave of miners' bankruptcy, and will rebound to $30000 in the second half of 2023. The high price fluctuation of BTC may be affected by a wide range of factors.
According to Coinglass data, BTC recently had more than 9 billion open positions in the futures market. At the same time, the market value of BTC open position options was US $3.4 billion, while the amount of Deribit on the cryptocurrency derivatives exchange accounted for more than 76%.
In addition to market uncertainty, the upcoming regulatory regulations in 2023, namely the EU's Crypto Assets Act and the US's Lummis Gillibrand and Warren Marshall Acts, can bring stability and transparency to the market and make investors think that the investment environment in this field is more secure.
4、 Organization layout DeFi
In addition, in the field of DeFi, the interest of the organization has emerged in 2022. In particular, large banks and financial institutions have shown great interest in the fields of payment, custody and AML solutions. Barclays Bank acquired the shares of Copper, an encryption custody company, while the innovation department of Standard Chartered Bank and Northern Trust, an investment management company, cooperated to launch the encryption currency custody service for institutional investors. Bank of New York Mellon is the largest custodian bank in the world. It cooperates with blockchain analysis companies to help track and analyze cryptocurrency products.
By the end of 2022, BlackRock, Citigroup and other financial service companies are investing more than 1 billion dollars in Defi. Because these companies see the needs of institutional customers interested in the encryption asset category, they are motivated to create products to support their customers. As more central banks develop their own digital currency plans, banks around the world will prepare for blockchain. The banking business on the chain may become the next stage of digital banking, in which new business models and financial products will emerge.
To sum up, the overall macro environment will continue to exert pressure on high-risk assets such as cryptocurrency. The crypto market will keep close contact with the central bank's monetary policy. However, the cryptocurrency market is more likely to fluctuate laterally in 2023, rather than continue to fall heavily. Driven by the acceleration of NFT in traditional brands, more users will enter NFT. NFT will continue to serve as a tool for the integration of cryptocurrency and art and culture.