Why did the price struggle for most of 2023?
It’s impossible to assign a single clear cause behind bitcoin’s price action, but here are some possible reasons:
The Wall Street Journal reported that Elon Musk’s spacecraft manufacturing company, SpaceX, may have sold part or all of its bitcoin holdings.
Analysts expected the American central bank to keep hiking interest rates. This makes borrowing more expensive and potentially hamper spending on cryptocurrency, with investors instead favouring safer, traditional investing routes.
Evergrande, a Chinese property development giant, has recently filed for bankruptcy. There are fears that due to the size of the firm, the collapse will send ripples through the Chinese economy and hamper confidence, lowering cryptocurrency investment
While inflation has fallen in several developed countries, there are still fears that it could remain historically high for some time. This can have a negative effect on consumer confidence and spending on cryptocurrency.
The cryptocurrency market has begun to face regulation in several major countries including China and United States – and therefore a stricter framework of rules. This has seen cryptocurrency exchanges such as Bittrex forced to shut down.
But while regulation could harm cryptocurrency prices in the short term, stricter policing of the market is overall considered to be a good thing.
It’s not just the cryptocurrency market suffering. Global stocks have had a difficult year as result of:
The war in Ukraine
Inflationary fears
Higher interest rates, which have made it more expensive for businesses to borrow money
Turbulence in the stock market has spilled over into the cryptocurrency space.