Look at the Fundamentals and Expect Volatility, Say Crypto Market Experts

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 to the fundamentals.

2023 has been a wild ride for investors and traders. Having ended 2022 feeling like we’d been dragged through the mud, Q1 has given us some reasons to be optimistic so far.

For example, the daddy of cryptocurrencies, BTC, is up approximately 33% since the beginning of the year, along with Cardano (ADA). ETH is up approximately 30%, and BNB is up 17%.

However, most of these positive price actions came in January. February was a much more mixed picture, with the market seeing significant cooling off. The recent trouble with crypto-friendly bank Silvergate has also caused a degree of market turbulence. As we approach the end of Q1, BeInCrypto approached a few experts to see their views on the market.

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

Look to the Fundamentals

Despite the start of 2023 is a good one, investors, in particular, shouldn’t be distracted by the possibility of quick returns. Not everyone is diligent in the markets; living your life can mean missing key price movements. As anyone familiar with the space will know, the crypto markets are volatile, and things can change suddenly. A modest return can turn into a modest loss very quickly.

Unlike 2021, today’s market is not a seemingly never-ending hype machine. Observers are far more cautious and skeptical than they were before. You can expect prices to reflect that.

Alex Yevlakhov, COO of Jumbo Exchange, believes that 2023 promises to be a year of “less promise and more product.” We can expect a shift towards “fundamentals and working solutions that already either have proven their worth or have an established user base.”

“As retail investors, we should take notice of trends that are being laid out by prominent VCs and market movers. At this time, it seems that fundamentals are taking precedence over promise. One should structure their investment/trading strategy accordingly.”

Be Wary of AI Tokens

One of the big movers of 2023 was AI tokens. However, there has been debate about the fundamentals of many of these projects. That is not to say they are scams, but they may not be the best projects for long-term, safe bets. One of the most prominent tokens was SingularityNET (AGIX) which spiked 1328% from the beginning of the year to February 8. An eye-watering return.

However, the market has since cooled off considerably, dropping approximately 42% since that high.

Other tokens have seen considerably more volatility.

SingularityNET (AGIX) has seen considerable highs this year | Source: CoinMarketCap

Yevlakov thinks that investors and traders should be wary of this trend for two reasons. “First, there is already a wave of bandwagon hoppers trying to create vaporware simply for the sake of cashing out. Second, AI and Blockchain are not so congruent parts, and actual attempts at meshing two together will be a long and arduous process if at all possible.”

Reports have shown that gaming is becoming a mainstay of the Web3 ecosystem, making up nearly half of all on-chain activity. There could be ample opportunities here, says Yevlakov. “Gaming and highly user-centered Dapps will continue to be valued by blockchain ecosystems and investors.

I anticipate this trend will continue to grow steadily in Q1 and Q2 of 2023.”

Invest Conservatively in This Environment

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

“Therefore, I’d caution against fully deploying into the crypto markets at this stage and favor a DCA [dollar cost average] strategy into digital assets with strong fundamentals and revenue.”

A DCA strategy refers to investing a fixed amount of money at regular intervals (like every week or month) instead of investing a large amount of money all at once. By doing this, you are able to benefit from both upswings and downswings in the market without having to predict their direction.

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

There Is Less Risk of Overvaluation

If we haven’t made our point already, the next few months will probably involve high volatility. “Trading is and will be difficult,” says Giorgi Khazaradze, CEO of crypto trading platform Aurox.

However, that doesn’t mean you shouldn’t get involved if you have your wits about you. Compared to the hype of 2021, tokens on the market are better reflecting their underlying fundamental value, he says.

“These next two quarters and possibly throughout the entire year is the perfect time for investors to jump in. Investing in the long term rather than the short term. Valuations are coming back down to what they should be, and companies are no longer overvalued.”

Khazaradze also warns against blind optimism. The bull market in crypto doesn’t last forever. Although people get excited and caught up in the hype, he warns that we need to remember that crypto goes through cycles every few years.

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

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