Fakeout or Breakout - January Market Report & Portfolio Update

Stefan Erben Author

Posted On Jan 31, 2023 |

In this report, we will take a look at the current market and the impact on the investor portfolio.

Welcome to the monthly market report from CryptoExplorer. Despite the ongoing challenges, this year has started off better than I expected, and I am pleased to present an overview of the progress so far.

In this report, I aim to provide a comprehensive overview of the current situation in the crypto market and what to expect in the coming months. My focus is to offer guidance and education, giving a better understanding of the current challenges and opportunities in the market. So, let's dive in and explore what happened in January and what can be expected moving forward.

Current situation

The current situation in the crypto market is characterized by FOMO (fear of missing out) and a bull run mentality.

We already pointed out the most likely reasons for the pump in last week's newsletter:

It's hard to say if this market trend is sustainable, but let's dive in and explore the reasons behind it:

1. Low liquidity in the crypto markets is a major factor.
2. Genesis recently filed for Chapter 11 bankruptcy and it's possible this is affecting the market pump. More on that below
3. There are rumors that stablecoins are being exchanged for crypto due to issues with Silvergate bank.

Despite the recent bankruptcy filing by Genesis, the market has continued to react positively. This can be explained by the following points:

1. Genesis recently filed for Chapter 11 bankruptcy, which means a final audit will take place. Higher crypto prices = higher valuation in the final audit? ;)
2. Bankruptcy is also already priced into the market a bit because the topic has been in the air for weeks. The impact is different when people are already expecting it. Because many had the Genesis issues on their radar for several weeks. We also talked about it in the last report in December.
3. Mentality change: People who are in the market now think differently than people who were still in the market in 2022. Most gamblers are now already broke, now people want to buy up the low prices and build good positions.

However, it's important to note that the market trend is uncertain and unsustainable. New investors should exercise caution and not go all-in. The following chart for Bitcoin shows that a significant portion of short-term trader holder supply is currently in profit.

In determining what new BTC investors have been up to, Glassnode assessed the coin’s Percentage of Short-Term Holder Supply in Profit metric. It found that the recent surge in Bitcoin’s price to $23,000 pushed this metric to above 97.5% in profit for the first time since the all-time high in November 2021.

However, investors should remain cautious, as when more than 97.5% of short-term holder supply is in profit, these players are more likely to exit at break-even or profit, Glassnode opined.

While the current market conditions may bring short-term benefits, it's important to keep in mind the reality of the situation and not let emotions cloud your judgement.

Don't get me wrong: I'd love to see new ATHs, thinking about my needs (both personal and the benefit to my business), because I'd only benefit from higher prices. But that doesn't mean I'm playing perma-bull here now. And I like reality, I don't live in a made up world where I am controlled by media and other people's opinions. So now when I get asked the question if we will see new ATHs in 2023, I can only shake my head.

I try to argue both the bearish and bullish side, I think that's important. Because that's the only way to get better, the only way to learn. With black and white opinions you usually do not get far. Ok maybe if you’re an influencer with a controversial opinion :D

How to move on from here

As a crypto investor, it's important to have a solid understanding of the current market landscape, rather than focusing solely on specific coins to buy or sell. This means, for me, it is important that people understand the concepts on why I buy ans ell, not exactly which coins I buy/sell.

There are some things to keep in mind in the next month:

• We could see the USD bounce strongly
• S&P500 golden cross (= when 50-day moving average rises above its 200-day moving average)
• Genesis problems remain, but crypto only has problems when Digital Currency Group has problems (parent company)
• Short term holders in profit
• Too much / too early hype?

The upcoming week is crucial as there is an interest rate hike by the FED on Wednesday with a (probably) +25BPS increase. It's important to keep an eye on the statements made by the FED regarding future plans as they could be hawkish or bullish. The markets are currently filled with a lot of hope, so there is the danger of disappointment. The macro factors continue to be the most crucial element affecting the market, as our analyst Jacques already preaches since the last year.

Historically, February has always been a bullish month, but January was already a surprise this year.

Portfolio Update

The crypto market seems to be performing well, with Bitcoin reaching new highs and Ethereum recovering, while SOL is showing a good recovery and PLU is performing well, although it could be better. Given this market trend, it is advisable to diversify your portfolio and reduce risk.

For our demo portfolio, it is advisable to reduce exposure to PLU and SOL and focus on building positions in 2023, with the goal of selling in probably three years for long-term gains.

Therefore I will:

• Sell 6 PLU @ 9.97 USDT.
• Sell 5 SOL @ 24.50 USDT.

Current stats for the portfolio:

One difficulty with the demo portfolio is then no new capital is added. DCA would be the best way to build further exposure to the market. If you have any ideas on how and if I should add new capital to the demo portfolio, please let me know.

These orders contribute to a balanced portfolio and gives us more security in case of market fluctuations.

Summary

Well, CryptoExplorers, January was sweet! But my investment strategy remains the same, even with rising prices. Slow and targeted positioning in good projects, low risk, focus on building strong positions and earning a little cashback with crypto cards. The results speak for themselves. 🚀

What happens next depends on which dominoes fall. We are not the ones who moves the dominoes. Our task is to understand which dominoes there are, how they are connected, and who might move which domino.

And remember, in crypto, it's not about timing the market, it's about time IN the market. So let's make the most of it. Stay informed, stay safe and let's get this bag! 💰

Categories: Report

* The content in this report is for informational purposes only, you should not construe any such information or other material as legal, tax, investment, financial, or other advice. Always do your own research! Nothing contained in this video constitutes a solicitation, recommendation, endorsement, or offer by CryptoExplorer or any third-party service provider to buy or sell any digital assets or other financial instruments in this or in any other jurisdiction in which such solicitation or offer would be unlawful under the securities laws of such jurisdiction.