Expect volatility in the cryptocurrency markets, experts say

BeInCrypto spoke to crypto market experts about what to expect for the rest of Q1 and Q2. Two themes were clear: expect volatility and look at the fundamentals.

2023 has been a crazy ride for investors and traders. After ending 2022 feeling like we were dragged through the mud, the first quarter has given us some reason to be optimistic so far.

For example, cryptocurrency daddy BTC along with Cardano (ADA) has gained around 33% since the beginning of the year. ETH was up around 30% and BNB up 17%.

However, most of this positive price action took place in January. February was much more mixed and the market experienced a significant cooling. The recent trouble with crypto-friendly bank Silvergate has also caused some turmoil in the market. As we near the end of the first quarter, BeInCrypto approached several experts to get their views on the market.

As always, trade responsibly and do not invest more than you can afford.

Check out the basics

While the beginning of 2023 is good, investors in particular should not be distracted by the possibility of quick returns. Not everyone is diligent in the markets; living your life can mean missing key price moves. Anyone familiar with space knows that crypto markets are volatile and things can change suddenly. A modest profit can very quickly turn into a small loss.

Unlike 2021, today’s market is not a seemingly endless hype machine. Observers are much more cautious and skeptical than before. You can expect the prices to reflect this.

Jumbo Exchange COO Alex Yevlakhov believes that 2023 promises to be the year of “less promises and more products”. We can expect a shift towards “basic and working solutions that have either already proven themselves or have an established user base.”

“As individual investors, we should pay attention to the trends presented by outstanding VCs and market players. At the moment, it seems that the basics take precedence over promises. You should structure your investment/trading strategy accordingly.”

Watch out for AI tokens

One of the biggest changes in 2023 was AI tokens. However, there has been debate about the basis of many of these designs. This does not mean that they are scams, but they may not be the best designs for long-term, safe bets. One of the most famous tokens was SingularityNET (AGIX), which increased by 1,328% from the beginning of the year to February 8. Amazing comeback.

However, the market has since cooled down significantly, falling about 42% from that peak.

Other tokens have seen much more volatility.

SingularityNET (AGIX), CoinMarketCap AI token
SingularityNET (AGIX) has seen significant gains this year | Source: CoinMarketCap

Yevlakov believes that investors and traders should watch out for this trend for two reasons. “First, there is already a wave of trendy jumpers trying to create vaporware just to make money. Secondly, AI and Blockchain are not as cohesive parts, and actually trying to bring them together will be a long and arduous process, if at all possible.”

Reports have shown that games are becoming the backbone of the Web3 ecosystem, accounting for almost half of all activity on the chain. There could be many possibilities here, says Yevlakov. “Games and highly user-centric Dapps will continue to be valued by blockchain ecosystems and investors.

I predict that this trend will continue to grow steadily in Q1 and Q2 2023.”

Invest conservatively in this environment

Nathan Thompson, Lead Tech Writer at cryptocurrency exchange Bybit, suggests a more conservative strategy to hedge against future volatility. “Although we’ve had a great start to the year, the fight against inflation is far from over,” he says. “The risk of a recession is very real.”

“Therefore, I would caution against full rollout in crypto markets at this stage and would advocate DCA [dollar cost average] strategy into digital assets with solid foundations and revenues.”

The DCA strategy refers to investing a certain amount of money at regular intervals (e.g. weekly or monthly) rather than investing large sums of money all at once. This way, you can benefit from both ups and downs in the market without having to predict their direction.

However, there is a downside. Since the market tends to grow over the long term, a lump sum investment will provide a better return.

The risk of revaluation is lower

If we haven’t clarified it yet, the next few months are likely to be very volatile. “Trading is and will be difficult,” says Giorgi Khazaradze, CEO of cryptocurrency trading platform Aurox.

However, that doesn’t mean you shouldn’t get involved if you have a mind about yourself. Compared to the hype of 2021, he says, the tokens in the market better reflect their fundamental value.

“The next two quarters, and possibly the entire year, is the perfect time for investors to jump in. Investing for the long term, not the short term. Valuations are back to where they should be and companies are no longer overvalued.”

Khazaradze also warns against blind optimism. The boom in the cryptocurrency market does not last forever. While people get excited and get caught up in the hype, he warns that we need to remember that cryptocurrencies go through cycles every few years.

“Everything about investing and trading will revolve around risk management. So when the next bull market comes, manage your risk properly and don’t expect it to last forever. It could end any day.


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