Crypto Market Volatility Expected, Experts Say

BeInCrypto spoke with cryptocurrency market experts for the remainder of Q1 and Q2. His two themes were clear: anticipating volatility and focusing on fundamentals.

2023 has been a tumultuous year for investors and traders. Having ended 2022 feeling like we’ve been dragged into the quagmire, the first quarter has given us some reason to be optimistic so far.

For example, BTC, the father of cryptocurrencies, is up about 33% year-to-date, along with Cardano (ADA). ETH is up around 30% and BNB is up 17%.

However, most of these positive price actions occurred in January. February was even more complicated, with the market cooling significantly. Recent troubles with crypto-friendly bank Silvergate have also caused some turmoil in the market. Towards the end of Q1, BeInCrypto reached out to several experts to confirm their views on the market.

As always, trade responsibly and don’t invest more than you can afford.

See fundamentals

2023 is off to a good start, but investors in particular shouldn’t be distracted by the potential for quick returns. Living your life can mean missing out on major price movements. As anyone familiar with the field knows, the cryptocurrency market is volatile and things can change suddenly. A modest return can quickly turn into a modest loss.

Unlike 2021, today’s market is not a never-ending hype machine. Observers are much more cautious and skeptical than before. You can expect the price to reflect that.

Alex Yevlakhov, COO of Jumbo Exchange, believes 2023 will be the year of “less promises, more goods.” We can expect a shift towards “basic, working solutions that have already proven their worth or have an established user base.”

“As retail investors, we need to pay attention to the trends being developed by prominent VCs and market movers. Fundamentals seem to take precedence over promises at the moment. You need to build a trading strategy.”

Be careful with AI tokens

One of the big moves for 2023 was AI tokens. However, the basis for many of these projects was disputed. I’m not saying it’s a scam, but it may not be the best project for long-term, safe betting. Soared 1328% by day. A spectacular return.

However, the market has since cooled significantly, down about 42% from its highs.

Other tokens have much higher volatility.

Yevlakov believes investors and traders should be aware of this trend for two reasons. “Firstly, there is already a wave of bandwagon hoppers trying to create vaporware just to cash out. Attempting to do so would be a long and difficult process if possible.”

Games are reportedly becoming a mainstay of the Web3 ecosystem, accounting for nearly half of all on-chain activity. There may be enough opportunities here, he says Yevlakov. “The game and his highly user-centric Dapps will continue to be appreciated by the blockchain ecosystem and investors.

We expect this trend to continue growing steadily in the first and second quarters of 2023. ”

Invest sparingly in this environment

Nathan Thompson, lead tech writer at crypto exchange Bybit, suggests a more conservative strategy for hedging future volatility. “The year is off to a great start, but the fight against inflation is far from over,” he said. “The risk of a recession is very real.”

“Therefore, we support DCA with caution in fully deploying to the cryptocurrency market at this stage. [dollar cost average] Strategies for digital assets with strong fundamentals and returns. ”

A DCA strategy refers to investing a fixed amount at regular intervals (such as weekly or monthly) rather than investing a large sum of money at once. By doing this, you can profit from both rising and falling markets without predicting the direction.

However, it has its drawbacks. Lump sum investments offer better returns as the market tends to rise over the long term.

less risk of overestimation

If you haven’t claimed it yet, the next few months are likely to be more volatile. Giorgi Khazaradze, CEO of cryptocurrency trading platform Aurox, said: “Trading is and will continue to be difficult.

That doesn’t mean you shouldn’t participate if you have your wits. Compared to the 2021 hype, tokens on the market better reflect their underlying fundamental value, he says.

“The next two quarters, and probably the whole year, is a great time for investors to dive in. Invest in the long term, not the short term. Not.”

Khazaradze also warns against blind optimism. Cryptocurrency bull markets don’t last forever. People get excited and get caught up in the hype, but he warns that we need to remember that cryptocurrencies go through cycles every few years.

“Everything about investing and trading revolves around risk management. So when the next bull market starts, manage your risk well and don’t expect it to last forever. there is potential.”