If there are no special extremely adverse black swan events or external macro factors worsening, we believe that the bottom for this round of bear market has already appeared, and we expect a large upward trend to appear relatively densely next year.

By Discus Fish， Cobo Co-Founder and CEO

Interest Rates and FTX

First and foremost, the biggest macro impact factor in 2022 is interest rates hiking, which brings pressure to global assets including cryptocurrencies. Along with events such as the FTX crash within the cryptocurrency market, the industry has suffered a great blow.

The biggest impact of the fall of FTX is on the existing ecosystem of exchanges. This ecosystem will continue to evolve to address the trust issues with centralized exchanges. Companies in the industry, including Cobo, are currently working hard to find ways to promote a more transparent and healthier trading ecosystem.

Regarding DCG (Digital Currency Group)

Currently, it seems that the situation with DCG will not further escalate — by escalation, I mean a scenario where tens of thousands of bitcoin assets are forced to be liquidated. Therefore, from the perspective of the major driving factor for market downturns, there is no significant risk of large-scale liquidation.

Regarding Ethereum

The second matter is also relatively clear, which is that the Ethereum Foundation has announced that the Shanghai upgrade in March is basically confirmed to happen on time. The foundation has confirmed that even if other features are put on hold, the Shanghai upgrade will be guaranteed.

From this point of view, Ethereum has injected a strong stimulus into the industry. In the past three months, the entire market has revolved around the management of the crypto market, repeatedly around a point staking. Therefore, the staking liquidity risk that troubled everyone in 2022 can be smoothly solved through the Shanghai upgrade in March.

Looking back at history, the Ethereum Foundation generally will take the initiative to choose some external favourable macro environment when it is making major strategic decisions, whether it is 1559, or merger, or the Shanghai upgrade. Therefore, March could also be a relatively important time.

Third, we see that many L2, especially ZK-based L2, projects have all stated that they will launch testnet or mainnet in Q3 or Q4 of 2023.

Overall, from internal factors in the industry, first of all, there is no major potential risk, and in addition, there are two favourable factors, one in March and the other in Q4. Therefore, there are not many factors or events that drive the market down.

Cryptocurrency Cycle

In addition, we need to pay attention to two relatively certain factors, one is that there are only more than 470 days before Bitcoin’s next halving. If we replicate the entire halving cycle of the past ten years, it also means that a new round of market may be born at the end of this year.

The other is that from the entire cryptocurrency market cycle, it is always bull long and bear short. Since last March, when we began to enter the bear market stage, this cycle is basically more than a year and a little time, and it’s almost over.

Based on the above analysis of macro and industry factors, looking back at the entire industry in the past year, we have passed the most painful or rapid-decline stage in this bear market, and are now in a stage of gradually restoring confidence, seeking new narrative logic, and consolidating the market.

Looking forward to the industry in 2023, with the accompaniment of the interest rate cycle and these driving factors within the industry, it is expected that there may be a wave of market hot spots in Q2, and another wave may begin in Q4 of the latter half of the year.

If there are no special extremely adverse black swan events or external macro factors worsening, we believe that the bottom for this round of bear market has already appeared, and we expect a large upward trend to appear relatively densely next year.

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