The Best Way to Trade Cryptocurrencies in 2023

Dec 28, 2022

2022 was a terrible year for cryptocurrencies.

And unless something miraculous happens, 2023 could be just as bad. Unfortunately, the FTX situation made matters far worse, plunging cryptos deep into a new crypto winter, forcing many to pack up and ditch the digital currency space altogether.

Since 2022 began, Bitcoin plummeted from a high of $47,949 to $16,603.  Ethereum fell from $3,777 to $1,194.  Binance Coin dropped from $530 to $284.

Yet, the carnage may be far from over…

Yuya Hasegawa, an analyst at crypto exchange Bitbank, says the crypto winter will continue through the first half of 2023.  The analyst also believes BTC could fall 50% from current levels, worst-case to about $8,000, as noted by Barron’s.

Katie Stockton, managing partner at technical research group Fairlead Strategies, says BTC could test support around $15,600 in coming weeks, which could give way to $13,900. ““Negative long-term momentum remains a drag on Bitcoin, as long-term oversold conditions are being absorbed without a meaningful bounce,” she added.

Unfortunately, until some trust has been rebuilt, cryptocurrencies may not find a way back for quite some time.  At the same time, though, there are trading opportunities to be found—especially on the short side of mining stocks, and companies with large BTC holdings.

Look at MicroStrategy (MSTR), for example.

The company owns about 132,500 Bitcoin at an average price of about $30,397, with a total value of about $4.03 billion. Unfortunately for the company, that has since been halved.  It would also explain why shares of MSTR fell from about $900 to $140.51. While investors can also jump on MSTR as a contrarian bet, that may not be a good idea just yet.  

Should Bitcoin see its value cut in half from current prices, MSTR could potentially test its 2020 low of about $90 a share.  In short, MSTR may be a better short, than a long bet right now.

Even the mining stocks are getting crushed – and may still be worth shorting.

Marathon Digital (MARA) fell from about $15 to $3.15 recently.  Riot Blockchain (RIOT) fell from about $10 to $3.29.  Galaxy Digital (BRPHF) dropped from $5.50 to $2.46.

If and when we see a bottom in cryptocurrencies, MSTR and the miners may be a steal.  Right now, though, they could all drop even more.

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