Happy New Year from all of us at CryptoRoundUpAfrica.

We want to say a big thank you to our fantastic readers. We have enjoyed writing every single one of these newsletters and we hope you have enjoyed reading them as well and that they have helped shape your macro bias in some way for the better.

This year, we are building even better and we’ll like to invite you to the front-row seats by joining our newly minted Telegram community. Click here and join.

CRA recently appointed a new CEO. He is a Top 1% Web3 creator and with this new appointment, we aim to provide more value to our community. 2023 is an exciting time ahead for all of us. Join us by clicking on the green thingy 👈🏾.

This Week.

1. Is the worst over in the crypto market? (🤔)

2. 6 things to pay attention to in 2023. ( Groovy made a list 📝)

3. Here are 13 narratives you should watch in 2023 (and a few to avoid 📃)

Bitcoin/USD

Bitcoin has continued to range v USD making a weekly high of $17,024 and a weekly low of $16,552.

There’s nothing to see here as far as we are concerned.

Our areas of interest remain $19,000 for a short entry with a midpoint of $16,000 which depending on technical indicators may provide a good long entry. The lower range is $14,000. This is where we’ll be looking to buy and start our DCA for the year. We believe we may see Bitcoin as low as $10,000 this year. We’ll explain why in the macro bit.

We didn’t get the historical holiday rally which is psychologically bearish. The failed breakout at $18,300 is also concerning as the rally was sold out faster than a Wizkid show. This is also concerning- the failed rally part. Not the Big Wiz part.*

Trading is 80% patience according to the folks at the Bureau of Imaginary Statistics. Stay Patient!

Ether/USD

More sideways action like a Mikel Obi pass. I remember watching Mikel Obi at the youth championship and there was seemingly nothing he couldn’t do until he met Mourinho and started passing like Ether’s price action. Sideways only.

$1,300 is doing its best impression of the Mario final boss. $1,100 remains the mid-term support where we’ll be looking to enter a long. There’s not a lot of breathing room between both prices. E chokeee, to unchoke it, we’ll have to look further down at the $800 where we’ll be looking to do business. It doesn’t hurt to set an entry at this price at forget it if you have a bit of extra crypto you’re not using.

Is the worst over?

Why does Oloye think so?

We have to think fundamentally.

What caused the bear market? Is it getting better? When would it get better? What would be the signs of it getting better? What should we look out for as confirmation?

• What caused the bear market? The bear market began with the announcement of quantitative tightening by the US Federal Reserve. In response to high inflation, it wanted to mop up liquidity and end the easy money Covid-era that gave us the last bull market.

• Is inflation getting better?

  See for yourself.

• Yes, inflation has peaked at 9% YoY. But it’s still 7.10% YoY which is far from the Fed’s target of around 2%.

• When would it get better? It has progressively gotten better since it peaked. We believe QT will continue to be a reality as long as inflation stays above 4% where the Fed will start to really moderate their rate hikes as concerns over deflation become real.

• What would be the signs of it getting better? The market is driven by narratives. For now, the narrative is inflation. When it becomes deflation, that would be a good sign. Long everything at the first mention of quantitative easing. And I mean everything, don’t forget the memes coins too. Obviously not financial advice 😉.

• What should we look out for as confirmation? The US added 223k jobs v 200k expected and the unemployment rate fell to 3.5% v 3.7% expected according to the most recent data. That’s good news for everyone else except the Fed.

  A strong job market is an inhibitor to the fight against inflation. This means the Fed will target raising interest rates for longer. Until companies no longer have access to cheap credit, forcing them to tighten their belts, leading to further job cuts.

  So we should pay attention to the earnings reports of the biggest corporations, the farther they are from projected earnings, the closer we are to getting out of quantitative tightening.

  A recession is somehow also good news if what we are concerned about is Fed tightening. (Sometime in the future, I imagine we’ll pay more attention to the version of whatever China’s version of the Fed is.)

  Recession is unemployment at 6%, so higher, not lower is good news for the Fed in its fight against inflation.

Important dates to pay attention to in January.

• Jobs data: January 6th ( Higher than 3.7% 📈, lower than 3.7% 📉)

• Inflation CPI data: January 12 ( 6.1 or less 📈, 7.1 or more 📉)

• Fed Meeting Jan 31-Feb1.

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6 things to pay attention to in 2023.

Things to watch out for in crypto in 2023 comprise trends, narratives and events that are likely to happen as the year proceeds and unravels.

Return Of The Dinos:

In crypto, Dino coins (Dinosaurs) are coins that have lived through multiple crypto boom and bust cycles. These are coins that have existed for at least 5-6 years in circulation and are well-distributed.

Some of these coins were either mined as PoW or purchased through ICO/IEO, and most seed round investor tokens have been completely unlocked and are in circulation.

We see these tokens making a comeback due to liquidity conditions. Many retail investors have been hurt in the last 2 years by VCs perpetually dumping overvalued seed tokens, bought at dirt-cheap prices, on them. Dinosaur coins tend to do well in these conditions because everyone is playing on equal footing and not getting dumped on by early investors, as there is no seed investor waiting to dump cheap tokens on traders (LTC, XMR, ZEC, XRP, XHV, MATIC for example).

Dinosaur tokens have years of price action and have survived bear markets and done well in bull markets. They stand a better chance of catching bids compared to the new coins from the last cycle, which have a low float and high fully diluted valuations with lots of token unlocks still coming.

Layer 2's Go Live:

The long-awaited Layer 2 (L2) narrative that has been permeating in crypto for a while finally has a chance to go live. Layer 2 protocols are the consensus Ethereum scaling solutions to solve the congestion and high fees problems on Ethereum Mainnet, with low latency and cheap fees.

The new L2 design architectures have been Optimistic Rollups and Zero Knowledge Rollups. Only Optimism ($OP) launched its native token in 2022. Arbitrum, ZKsync, Starknet, Aztec, and Scroll are all expected to launch native tokens in 2023. We believe that as the market is currently starved of new narratives and traders are yearning for a catalyst for speculation, Layer 2 protocols launching their tokens in the course of the year will be good reasons to bring back some liquidity and volatility into the market.

We speculate that these tokens will launch sometime in late Q1/Q2 2023, starting with Arbitrum, Starknet, and ZKsync with airdrops.

Live and Die By The META:

Crypto native metaverse projects first launched in August and September 2020 with Sandbox and Axie Infinity, respectively, when they were launched on Binance Launchpad.

In the summer of 2021, metaverse projects had their welcome-to-primetime moment with the rise of Axie Infinity in the Philippines and across Southeast Asia, ushering in the play-to-earn model.

By Q4 2021, Meta, formerly Facebook, announced their big bet and business model shift to the metaverse, which led to a big boom in the metaverse and play-to-earn sector.

The success of 2021 could not be replicated in 2022, as the sector equally experienced a bust like the rest of the market, and Meta's stock price is down over 75% since announcing its Metaverse move. However, Meta has doubled down on their bet, increasing their research budget, even though sales of its Oculus device have not met sales expectations.

The thesis here is simple: if Meta's bet starts paying dividends in 2023, it could bring new liquidity and volatility to the market. If it doesn't, it could spell disaster for the sector.

Moreee Token Unlocks:

Sorry to break it to you, but we should all know by now that more token unlocks in crypto usually results in downward pressure on the circulating supply of such tokens. The reason is, there’s usually no incentive for a VC or early investor to hold on to the tokens they bought which may have gone up considerably since the ICO price.

Token unlocks will be one of the major lingering issues of the year 2023 for token holders. Not all token unlocks are the same. During the bull run in late 2020 to mid-2021, token unlocks were bullish, but that has changed just as the market cycle has changed.

Token unlocks in the past year have been bearish, and we predict that they will be even super bearish this year than at any other time in history. A lot of tokens launched in 2021, and especially in 2022, have huge seed round unlocks coming up this year, which will greatly affect the prices of such tokens. Due to market frothiness, liquidity crunch, and low volatility, there is no demand for these tokens, and the lack of liquidity makes them even more susceptible to volatile movement as tokens unlock to low demand and higher supply conditions.

The seed round investors in some of these tokens are still up 10-50X and will most likely be rushing for the exit gate the moment they get their paws on these tokens to compete for the existing liquidity.

Some of the coins with huge unlocks in the coming weeks and months are $GMT, $ALPINE, $LOKA, $VOXEL, $C98, and $SAND.

WEN EASY MODE?

2022 was expected to be hard mode because the Fed announced ahead of time that they were planning to end Quantitative Easing (QE) and commence Quantitative Tightening (QT), which has led to frothiness and a liquidity crunch, leaving previously robust order books empty.

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In crypto, the hard mode has been exacerbated and made even worse by the implosion of UST/LUNA, CELSIUS, 3AC, and FTX/ALAMEDA.

The Fed has been raising rates for a year now and is inching closer to its projected terminal rate of 5.1% in 2023, as the current rate stands at 4.25%. Whether we get a recession in 2023 or not is left to time, as economists are divided on that. However, the European Central Bank President, Christine Lagarde, claims that if a recession is to happen in the Euro Zone, it will be short-lived.

On the macro side, if the Fed is to break something in the economy by over-tightening, Fed Chairman Jerome Powell announced in November that they have the tools to ease things. With the current accelerated pace of rate increases, we postulate that markets should bottom in late summer.

The good times should be back in August/September 2023, when bottoms have been formed, and markets are trading higher than the current price/yearly open on majors, both in stocks and crypto.

NARRATIVES:

Some of the emerging and persistent narratives for 2023 in crypto will most likely be centred around Artificial Intelligence, Metaverse, Decentralized Exchanges, Decentralized RPCs, Decentralized Physical Infrastructures (DEPIN), and of course, the never-ending Censorship Resistant/Algorithmic Stable Coin experiment. *uhm uhm, like UST but not like Luna.*

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Here are 13 narratives you should watch in 2023.

Edgy - The DeFi Edge 🗡️ @thedefiedge

You can generate wealth if you're early to the right crypto narratives. Here are 13 narratives you should watch in 2023 (and a few to avoid):

2:08 PM ∙ Jan 5, 2023

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3,708Likes1,309Retweets

This Twitter thread presents 13 narratives to watch or avoid in 2023. Some of the narratives in the list include Tokenized Real-World Assets (since land is fungible, why not sell it as NFTs), ZK rollups, NFT-Fi, decentralized sports betting, and decentralized social media.

Being early to a narrative that pops is one of the easiest ways to make money in crypto, so consider this the 11th commandment.

Thou shalt not be late to a poppin crypto narrative.

Thank you for reading.

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Groovy and Oloye for CryptoRoundUpAfrica ®️

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