Bitcoin began 2023 in an extremely strong way. Who would have imagined that the cryptocurrency which struggled with making little price increases in 2022 would produce an extraordinary performance in the first month of the new year? Well, since it’s the crypto market, you can never say never.
But the case of Bitcoin is not just about its resurgence. It is the fact that the revival from the 2022 lows was able to lead it to its best January performance in ten years. Imagine that, ten solid years! If you had gone through price tracking platforms like CoinMarketCap or CoinGecko, you would have noticed that BTC ended last year around $16,000.
However, in less than thirty days, the coin ranked as the most valuable cryptocurrency was able to register a 40% increase. As of this writing, Bitcoin was worth $23,167. The increment in the Bitcoin value has also been influential in driving the price of other cryptocurrencies. Altcoins like Ethereum, MATIC, Solana have been able to recover from their miseries in a big way. Even decentralised protocols like MakerDAO and Curve Finance have not been left out of the party. That leads us to the bone of contention— what next for Bitcoin?
This may sound like a big question but believers in the cryptocurrency seemed to have unwavering faith in this year’s Bitcoin form. In fact, most of their projections have been massive with no signs of bearishness or doubt. First, let’s look at the opinion of pseudonymous stock-to-flow creator PlanB, who is more bullish on Bitcon than ever.
Bitcoin to $100,000?
On January 12 2023, Plan B tweeted that he expects Bitcoin to reach $100,000 soon. And, when we say soon, it is not this year or next. But the on-chain analyst pointed out that Bitcoin might hit the milestone in 2025. Irrespective of that, Plan B said that he remains bullish on the BTC price in 2023.
For the year, he expects that the coin prices will be higher than 2022 after he noted that the $15,500 value of the said month was the bottom. However, you should know that these are just predictions even if it’s coming from a reputable person. The crypto market itself is not human respecter and projections can go sideways due to the high volatility. So, do you best not to consider this opinion as a guarantee while you do your own research.
Besides his bullish case of 2023 and 2025, PlanB also predicted for 2024. According to him, the year will be an important year, due to the Bitcoin halving billed to happen in March. If you don’t understand what Bitcoin halving is, then you might do yourself good by looking through beginner-friendly websites such as https://bitcoin360-ai.io/ for more details. Surely, experienced traders will have an idea but still we will explain briefly.
The Bitcoin halving is an event which occurs every four years to reward Bitcoin miners with the reward cut in half. Before the next one, there have been three halvings. The first was in 2012. At this time, miners got 25 BTC as reward. The next in 2016 happened with a reward of 12.5 BTC. In 2020, Bitcoin miners were rewarded 6.25 BTC. So, in this next halving, miners will get 3.125 BTC.
For plan B, the case for Bitcoin hitting more than $32,000 in 2022 after the halving was a no-brainer. This is because in past cycles, Bitcoin usually performed well after the halving. Although not immediately, most of the all-time highs recorded by the cryptocurrency happened months or a little over a year after the events. For example, the $69,000 all-time high recorded in 2021 occurred some months after the 2020 Bitcoin halving. So, it is no surprise that analysts are predicting a similar scenario.
Regulation And the FOMC
One thing that Bitcoin and the crypto market may not be able to escape is regulatory oversight and the reasons are absolutely glaring. Take for instance, the several collapse of crypto firms in 2022. Is it the crash of Terra LUNA and its dishonest founder Do Kwon? Or should refer to the Celsius case where customer withdrawals were halted without valid reasons? Or the FTX exchange collapse which wiped out billions of dollars and left many in pain?
So, as much crypto can reward active participation, there are occurrences that may be beyond your control. In this case, risk management does not solve it. But you can only hope that founders manage customer funds well. However, to prevent this, it may be necessary to involve regulation.
Although Bitcoin preaches decentralisation, repeated happenings like those mentioned above may mean that it is now important to involve a central authority. However, this does not still take power away from the people. The only issue may be the transparency of the regulators. This may need to be considered especially as the Ripple case with the United States SEC has started looking like a witch hunt. But for some, being on crypto firms’ heels is better than losing their Bitcoin into thin air. So, we may see this happen and it could affect the Bitcoin price.
Another aspect that historically and could still affect the Bitcoin trend is the Federal Open Market Committee (FOMC). This is the monetary policy team of the U.S. Federal Reserves. They are important because they have a say in determining interest rates. These interest rates, in turn, have an impact on the Bitcoin price.
For context, higher interest rates most times send Bitcoin price downwards, and vice versa. So, investors who are bullish on the Bitcoin price would hope that the FOMC continually sets lower interest rates so the market does not capitulate.
Demand Needs Hype
Lastly, demand is another factor that could determine where the next Bitcoin price heads. Yes, there are several factors that determine the coin price but nothing beats demand like any other market. And, to increase demand, Bitcoin may need all the hype it can get.
So, Bitcoin maximalists like Michael Saylor and Max Keiser may need to keep up their efforts with the hype. In addition, institutional investors including Tesla and Microstrategy would also need to ensure that they do not halt the buying momentum or sell a large part of their holdings so the market does not significantly crash. Nevertheless, the market still thrives on speculation apart from these factors. Hence, in some cases, you may need to depend on hope. That is why you should only invest money you can afford to lose.
Final Words
Yes! You might be elated by Bitcoin’s recent performance. However, we implore you not to get too excited. Not that the market would collapse or anything of such, it’s just a measure for you to expect the best and worst at the same time.
In addition, you may need to follow-up on development around the crypto space so you don’t get left out. This can also be crucial to your decision-making on investing or trading. As the year continues, Bitcoin can either keep up producing green bars or eventually fall to the bears. Whichever way it ends, ensure that you don’t become a part of exit liquidity.
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