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In the year 2023, Bitcoin has had a productive start to the year. Since the beginning of the year, the value of the cryptocurrency with the largest market capitalization in the world has risen by more than 25 percent.
Most of these gains were the result of an unexpected 20% rally that took place over the long weekend, with Bitcoin breaching the $21,175 barrier at the time of writing.
The surprising increases, which occurred against the backdrop of ongoing bearish sentiment in the market, caused many people to raise their eyebrows.
What is pushing the price up?
Inflation rose only slightly in the month of December 2022, leading some to speculate that the Federal Reserve (Fed) may suspend its rate hikes, a development that may have contributed to the growth of the cryptocurrency market.
Bitcoin, the stock market, and gold have felt the effects of inflation thus far. However, the institutionalization of Bitcoin and a series of Fed moves last year may have been beneficial for the cryptocurrency.
Experts are also bullish on Bitcoin due to the upcoming “halving event” in 2024. Bitcoin miner rewards have been observed to halve every four years (3,125 BTC). In addition, the supply decreases, which is believed to benefit demand.
As a result of a series of negative events in 2022, such as the Terra Luna catastrophe and the insolvency of FTX, the world’s largest crypto exchange, as well as predictions of global macroeconomic instability, Bitcoin’s market value fell around 65 percent.
An increase in demand is the main driver of the increase in the price of Bitcoin. Demand for Bitcoin is increasing as more and more people and organizations start to accept it as a payment option. Demand is also fueled by more people buying and holding Bitcoin as interest rises.
What does this pump mean for investors?
Investor sentiment, limited quantity, anticipation, and active participation from institutional investors are all contributing causes of Bitcoin price rising. Please note that the cryptocurrency market is extremely speculative and the price of Bitcoin could change drastically; as a result, it is impossible to forecast future price fluctuations for Bitcoin and other crypto assets.
Investors are in 2 minds about the sudden spike
While most analysts think that it is still too soon to tell if the bear market is over for good, they agree that the market mood has improved significantly.
As a result of the recent CPI data, falling inflation rates, and news from FTX that the company has recovered $5.5 billion worth of assets, etc., the market mood has improved. Therefore, there is a lot of momentum even though the market is still negative.
Bitcoin is up more than 24 percent in the past week. Thanks to this impressive rise, the widely followed “Bitcoin Fear and Greed Index” settled into neutral territory at 52 on Sunday, the first time in nine months that it has done so.
The index had risen to 55 earlier in the day, but had dipped back to 45 as of this writing, indicating that fear was still the dominant emotion and full trust had not yet been achieved. A week ago, the index marked 25, indicating “extreme fear.” This week’s reading shows a dramatic improvement.
Even the experts can’t agree on where the future of Bitcoin lies. Bitcoin is the best option for cryptocurrency investors, according to analyst Benjamin Cowen. He concludes that regardless of BTC’s performance, the Bitcoin Dominance Index (BTC.D) will ensure that BTC remains the most dominant cryptocurrency market participant.
He predicts that given the current regulatory situation of the global crypto market, altcoins will be subject to more restrictions than BTC. This is one of the main reasons why he believes that BTC will succeed. But he believes that Bitcoin has to go beyond the $23,000 barrier to win over skeptical investors.
Another prominent crypto critic, Il Capo de Crypto, called the latest boom “one of the biggest pitfalls for bulls” he has ever witnessed. He predicts that the price of Bitcoin will drop to $12,000 before the bulls can regain control.
The bleak outlook has not been denied despite the current rally. In a lengthy Twitter thread, he explained his position and stressed the need to protect profits. He praised investors who had made money during these times.
Bitcoin’s Relative Strength Index (RSI) agrees with this assessment. The Relative Strength Index for BTC has recently been above 87, indicating that the coin is overbought. According to the RSI indicator, a recession is possible if the BTC price starts to correct. And if the US dollar index rises, it could spell bad news for Bitcoin and other risky assets.
last word
This sector of the crypto business seems to be gradually getting over the disasters of 2022. Since the beginning of 2023, the value of most coins has increased; several of them have increased by more than 10%.
The market capitalization of all cryptocurrencies combined has surpassed the $880 billion region and is inching back towards the $1 trillion milestone. Bitcoin’s unexpected rise to over $21,000 was the icing on the cake for Bitcoin advocates.
However, with expert opinions all over the map, the future of the cryptocurrency with the longest track record looks a bit shaky. Investors should always do their own research and not risk more than they can afford to lose outright.
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