2022 was widely regarded as a prolonged CRYPTO WINTER, with high-profile collapses of the Terra/Luna ecosystem, FTX, and many others sending shockwaves through the industry. More than $2 trillion was liquidated from the total crypto market cap all-time high since November 2021.

Bitcoin lost more than 60% in 2022, its second-worst annual performance on record, and only its third down year ever. Other cryptocurrencies also suffered, with Ether losing about 70%, and an index of the 100 largest coins dropping roughly 65%.

Exactly one year ago, the global trade volume for the 24-hour period was approximately $70.48 billion. Today’s 24-hour volume worldwide is 67.43% less at $22.95 billion, highlighting the massive drop in activity and positive sentiments within the time period. 

At the time of writing, the crypto market cap is marginally up in the last 24 hours to stand at $798 billion. The 24-hour trading volume is down by 7% to stand at $17.91 billion.

What you should know

There’s a growing consensus that 2023 will hold great macroeconomic woes.

The International Monetary Fund (IMF) has warned that 2023 will be a tougher year for most of the world economy because the U.S., EU, and Chinese economies are all slowing down simultaneously. The IMF’s managing director Kristalina Georgieva stated “We expect one-third of the world economy to be in recession … Even countries that are not in recession, it would feel like a recession for hundreds of millions of people.” This isn’t going to be music to investors’ ears.

The following could shape the destiny of crypto and other asset classes in 2023:

• The ongoing war in Ukraine.

• Covid-19 in China.

• Central Bank rate hikes, especially the US Fed.

• The implosion of new ecosystems and platforms within crypto, or further contagion from developing situations such as the FTX collapse.

• Crypto-centric regulations and wider investment-focused regulations.

Investors should be looking to navigate this minefield of circumstances to ensure a profitable year.

Bitcoin's price action remains locked in a narrow range, after failing to budge throughout the Christmas and new year break.  Having sealed yearly losses of nearly 65% in 2022, BTC spent the year mostly in the red, and only a few analysts are actively predicting a recovery.

However, according to the Bitcoin Fear and Greed Index, the positive sentiment has marginally increased to 27 in the last 24 hours. This could be crucial to taking trading volumes back to normal after the holiday season and guiding the BTC price direction for the next few weeks. 

Bitcoin price has managed to hold the crucial support of $16.5K and start the year with an upside move. It is currently up by 1.05% in the last 24 hours, trading at $16,740.

What you should know

BTC supply is becoming increasingly dormant as speculators stay away. According to on-chain analytics firm Glassnode, the amount of the supply stationary in its wallet for the past five to seven years has hit its highest since January 2018. As the supply ages, the volume of coins moving on a short-term basis is likewise decreasing, hinting at an absence of knee-jerk speculative trading.

Bitcoin’s upcoming difficulty adjustment due tomorrow Jan. 3 is set to wipe out gains made two weeks prior. It's a sign that miners remain under pressure over BTC price performance. After rising 3.27% on Dec. 19, the difficulty will drop by an estimated 3.5% this week, thus failing to seal new all-time highs. 

Ethereum (ETH) is also riding the train of the wider market recovery, posting a 1.62% gain in the last 24 hours. ETH's price stands at $1,217.06, edging close to last month's high of $1,346.17.

Owing to the crypto winter, the total value locked (TVL) in the Ethereum decentralized finance (Defi) ecosystem declined by 76%. However, with more than 620 Defi protocols, ETH has the biggest total value locked (TVL) of any chain at $22.88 billion.

What you should know

The Ethereum Foundation and research team have been addressing emergent issues and progress in the maximal extractable value (MEV) domain, according to a compilation by Ethereum. 

On-chain data shows that the Ethereum number of exchange deposits has dropped to its one-month low of 820.881. This metric shows that investors are still generally HODLing their coins and the rate of trading on trading platforms is at a low ebb. Ethereum's exchange deposits have been printing new lows lately, showcasing the bearish sentiment that has engulfed the network over the past 30 days.

The Merge is just one of the five scheduled upgrades that the Ethereum network is bound to undergo before it completely transitions into its PoS consensus model. These remaining upgrades include the Surge, the Verge, the Purge and the Splurge and some of these are on track to be implemented this year. The community's expectation is that these upgrades will help to enhance the price of Ethereum, pushing it close to its previous all-time high (ATH) of $4,891.70 attained back in November 2021.

Solana (SOL) is up 14% today, a slight recovery from more than 30% in losses last week. This could be attributed to a show of support from Ethereum founder Vitalik Buterin, who tweeted last week that “smart people” have told him there is an “earnest smart developer community in Solana,” and that the chain has “a bright future” now that “the awful opportunistic money people have been washed out.” Buterin added that he hopes the Solana community “gets its fair chance to thrive.”

Elsewhere, STEPN jumped by 3.72%, Algorand gained 3.02%, and Terra Classic is up by 2.71% in the last 24 hours. The likes of Dogecoin, Cardano, Polygon, Binance, Tron, Litecoin and Polkadot were also trading higher today.