Bitcoin: Expectations of its rise to one million dollars failed in 2022. Will it be achieved in 2023
After the successes of the cryptocurrency market in 2021, market analysts had high hopes that the price of Bitcoin would rise to unprecedented levels, as some saw that the digital currency could reach a price of $100,000 or more last year. But it suddenly ended up falling to $16,500 by the end of the year
Difficult year
The fall of Terra Form Labs in June 2022 and the subsequent fall of FTX last November shocked the crypto world. In particular, the two collapses caused financial losses estimated at $ 50 billion. Because of these losses, strategies have evolved and lessons have abounded.
Especially crypto-centric organizations like FTX and BlockFi are not up to the level of the decentralized spirit of digital currencies. Their fall reflected the greed of human nature, and the presence of flawed personalities at its center. The failure had nothing to do with the underlying technology used.
After a difficult year marked by tightening monetary policy by central banks, especially the US Federal Reserve, Bitcoin lost more than 60% in 2022, its second worst annual performance ever, and only the third year in which it recorded a decline in its history. Other cryptocurrencies also suffered, with Ether losing nearly 70%, and the index of the top 100 cryptocurrencies falling nearly 65%.
The reason for the rises and the failure of expectations
Matt Malley, chief market strategist at Miller Tabak, said: "People didn't understand the value of cryptocurrencies as an asset class, cheap money in 2020 and 2021 was a driving cause for the rallies, thanks to the zero interest rate and massive quantitative easing policies. Now that these programs are gone, it will take much longer for the digital asset class to reach its full potential."
Fundstrat's Tom Lee, who predicted at the end of 2021, that Bitcoin could easily reach $100,000 in 2022 and that the $200,000 range could be achieved. "I know it sounds fanciful, but it's very good for the market," he said in an interview.
$500,000 and a million dollars!
Meanwhile, at the beginning of January last year, strategists at Goldman Sachs (NYSE:GS) predicted that Bitcoin would reach $100,000 over 5 years as it gained market share of gold. Mike Novogratz, a crypto advocate, said that Bitcoin could reach $500,000 in the same timeframe.
But perhaps none of them have been bolder than Arc Investment's co-founder, Kathy Wood, who at the end of November reiterated her predictions for Bitcoin's $1 million target by 2030 — nearly 6,000% more than current levels
At the beginning of 2022, many strategists misread how strong the Federal Reserve's quantitative tightening policy was, while working to curb inflation. Other central banks around the world have also raised prices, creating an undesirable environment for risky assets like cryptocurrencies – and a significant change from the strong days of 2020 and 2021, when rates were very low.
Bitcoin reached its highest levels in November 2021 despite the decline of 76% in just over a year, but traders are still optimistic about what Bitcoin will make and its ability to replace with fiat currency and reach the highest levels, during the fourteen years it has produced a strong community of supporters more than supporters of sports teams, as Twitter founder Jack Dorsey said that the world will have one currency and I believe it will be Bitcoin.
Market data is on the side of Bitcoin
Investor confidence in the cryptocurrency market could also increase due to their belief that the US Federal Reserve could raise interest rates on a smaller scale throughout 2023 due to signs that the Fed's strategy is working.
in a statement. The Federal Reserve noted that the possibility of an open and inflation-related policy shift remains:
"The Committee expects that continued increases in the target range will be appropriate in order to reach a position on monetary policy. The situation will be constrained enough to return inflation to the 2% range over time.
When determining the frequency of future increases in the target range. The committee will take into account the cumulative effects of monetary policy, the delays that monetary policy affects economic activity and inflation, and economic and financial developments."
According to CME Group, the crypto derivatives market that contains a global benchmark product estimates interest rates. It appears that these increases may be less than previously expected in the near future.
Indices such as the S&P 500 stock index, the Dow manufacturing index and the Nasdaq price index also provide an overview of the global economy. Currently, Bitcoin and major stock indices share a high correlation coefficient with the global economy. Bitcoin is affected by major economic events as well.
The chart also indicates a possible slowdown in interest rate hikes. This highlights the general feeling that future rates may fall and investors believe that this has created the possibility of a large-scale crypto market recovery.
Another positive sign that the price of Bitcoin BTC will rebound is the US Dollar Index (DXY). Historically, when the US dollar index DXY falls, the appetite for risky assets such as Bitcoin BTC and other cryptocurrencies increases.
So if you fear that interest rates and the growth of the economy will affect your Bitcoin digital assets BTC. Be aware that the price of Bitcoin BTC could continue to rise with bullish stock markets
Another positive sign that the price of Bitcoin BTC will rebound is the US Dollar Index (DXY). Historically, when the US dollar index DXY falls, the appetite for risky assets such as Bitcoin BTC and other cryptocurrencies increases.
So if you fear that interest rates and the growth of the economy will affect your Bitcoin digital assets BTC. Be aware that the price of BTC could continue to rise with bullish stock markets, but of course it is difficult to reach the $1 million levels predicted by Cathy Wood this year. Overall, the better the overall climate, the better for Bitcoin's price
