It has been a solid start to 2023 for Bitcoin and expert predictions suggest that the bullish momentum is far from complete.
The recent rally of cryptocurrencies like Bitcoin (BTC) and Ethereum (ETH) has renewed debate about whether the market is experiencing a sustainable rebound or if the trends are merely a precursor to a further decline.
Although Bitcoin remains down over 60% from its 2021 peak, digital assets have had a solid start to 2023.
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The value of BTC rose close to 40% in January to over $23,000. Many other major cryptos followed suit, including layer-1 blockchains Aptos (APT) and Solana (SOL), as well as metaverse tokens, The Sandbox (SAND) and Decentraland (MANA), which all soared upwards of 90%.
The rise in cryptocurrency prices is likely attributed to an expected decrease in inflation and reports that the Federal Reserve will not raise interest rates as aggressively in the coming months.
Both of these factors could see a return to "risk on" investing, which typically benefits cryptocurrencies.
Bitcoin Price Predictions: What Are The Experts Saying?
Finder interviewed 56 industry experts to get their opinions on what's next for the world's largest digital currency. Although the sentiment was mixed, 50% agreed that now was a good time to buy Bitcoin, 37% were happy to hold and only 13% of experts thought now was the time to exit long positions and sell.
Daniel Polotsky, founder and chairman of CoinFlip, stated, "Bitcoin will emerge from the ashes of the ruins as it always has in the past, and now may be a good time to feast on the dip."
President of NetCoins, Fraser Matthews, agreed with Polotsky.
"I believe that the current price of Bitcoin is a good entry point for investors, and I anticipate it will continue to rise in the long term," Matthews said.
However, some experts are warning to proceed with caution, forecasting that the sudden rise in values may lead to a crash or significant correction and cause losses for those who mistook it as the start of a prolonged uptrend.
Vetle Lunde, a senior analyst at Arcane Crypto, pointed out that "higher costs of living and a challenging economic backdrop reduce investors' ability to allocate capital to BTC".
Robert Johnson, professor at Creighton University's Heider College of Business, also has his doubts concerning the longevity of Bitcoin, claiming that there is a lack of use case, suggesting that it is nothing more than a speculative investment.
Chapter 11
Since the bull run of 2021, most digital assets have been negatively affected by rapidly rising interest rates and the failure of prominent crypto-based companies and exchanges, including 3AC, Celsius and FTX.
The latest victim and the most recent company to file for Chapter 11 bankruptcy is cryptocurrency lender Genesis Global Capital – 1 of 3 companies under the Genesis umbrella that sought bankruptcy protection on 19 January 2023.
Genesis was heavily impacted by the meltdown of Bahamas-based crypto exchange FTX and stopped allowing customers to withdraw funds on 16 November 2022.
In its filing to the US bankruptcy court for the southern district of New York, the lender stated that it had assets and liabilities between $1 billion and $10 billion and estimated that it had more than 100,000 creditors.
While this seemed like a near-certain opportunity to sell the recent bullish move, the market didn't respond as many expected and continued to the upside after a minor correction.
Although Genesis' bankruptcy filing was only recently confirmed, it was almost certainly seen coming and had already been priced into the market.
Since 13 January, over $250 million worth of BTC has been forcibly liquidated from short traders. These liquidations triggered a string of stop runs and helped to amplify the bullish move.
Bitcoin Technical Analysis
Bitcoin has finally broken above its 200-day moving average after a prolonged period of decline. If the bulls can keep the price above this level, the demand in the market will likely continue.
The next significant level for Bitcoin to surpass is the $25,000 price point, which, in the past, has served as a technical and psychological resistance zone.
However, a test of this level may not be imminent. There is a noticeable discrepancy between the price and the relative strength index (RSI) indicator on the daily timeframe, suggesting that a correction may come in the short term.
On-Chain Data
The chart below summarises Bitcoin price cycles since 2010. It demonstrates Bitcoin's price action and its correlation to the market value, realised value (MVRV) metric.
The MVRV compares Bitcoin's market value to its realised value and calculates a Z-Score, indicating whether the cryptocurrency is overvalued or undervalued.
Historically, the Z-Score falls into the green zone during bearish market phases, indicating that Bitcoin is trading at a low value and the bottom of the cycle is forming. But as the chart shows, each time the metric exceeded 1, Bitcoin experienced a significant increase, signalling the start of a bull market.
Bitcoin's recent rally has resulted in a significant increase in the Z-Score. If history is anything to go by, this push above 1 and out of the green zone suggests that the market may have entered a sustainable bullish phase.
Indicators, on-chain data and general price structure all agree and allude to a long-term bullish Bitcoin continuation. This agreement is hard to ignore, as all traders will confirm – confluence is key.
Although there's still a long way to go for many coins and tokens to reach their 2021 all-time highs, signs are positive that the crypto market has shaken off the countless negative events of 2022.
Josh Fraser, a co-founder at Origin Protocol, is particularly optimistic. "It will take us a while to climb back to all-time highs, but at the end of the day, Bitcoin is inevitable, and adoption at a similar level to gold would bring the asset to a price of ~ $500,000."
It's a new year, and if Josh's predictions come to fruition, it might be a big one for Bitcoin.
