Assessing the trajectory and potential of different assets in the highly volatile crypto market is often a matter of perspective, and no other coin proves this point better than Bitcoin. If we look at the coin’s current price, which at the time of writing was standing at $26,797, and compare it to the values of 2022, when the crypto market came crashing down and all major digital currencies including Bitcoin suffered massive losses, we get the feeling that the flagship crypto is on a winning streak. And we wouldn’t be too far from the truth either considering that Bitcoin has had a pretty solid run so far this year.
However, if we go further back in time and draw a parallel between Bitcoin’s present price and its record high of $68,789, we get a completely different perspective of the coin’s recent performance. So, it really depends on how you look at it and the length of time you’re referring to when analyzing its evolution.
For better or for worse, Bitcoin remains the most popular cryptocurrency at the moment and the biggest one by market cap, and there’s no denying that the asset has come a long way since its beginnings. However, it’s just as true that there’s no guarantee things will remain this way. In fact, the only certainty we have about crypto is that values are bound to change under the influence of a multitude of factors, whether that will translate into upswings or downturns.
So, just because Bitcoin has occupied the number one position in the industry since its inception, doesn’t mean it’s going to stay at the top forever. The coin started the year strongly, giving hope for a potential breakout, with over 80% gains in the first half of 2023 and increased interest from both institutional and retail investors. The news that large financial companies were applying spot Bitcoin ETFs also amplified the buzz around BTC. Unfortunately, after a few short climbs above $30,000, Bitcoin proved unable to sustain the price increase and fell back under $27,000.
This begs the question: what lies ahead for Bitcoin? With the halving still far away, is the king of crypto going to surprise us with a new bull run and more record highs, as it did in the past, or is it going to crash again and slump further in the charts? No one can predict the future or provide precise answers, but we can certainly speculate on the matter and make predictions about which side the scale is going to tilt in the future.
Reasons for a bearish outlook
The way Bitcoin is going to behave in the upcoming months depends on a wide variety of factors. From market sentiment, media coverage and individual and institutional adoption to political and economic events, there’s an intricate network of forces that can influence Bitcoin’s trajectory.
One of the factors that could push Bitcoin price on a positive path is a potential reintroduction of Bitcoin payments by Tesla. According to Elon Musk, the American multinational automotive and clean energy company might resume accepting BTC as a form of payment once Bitcoin becomes more sustainable, with 50% of the energy used to power mining operations coming from renewable sources. Musk is known for having quite an influence on the price fluctuations of different crypto assets, and with Tesla being a trailblazer in the automotive industry, we can assume that such a decision is going to make waves in the market and benefit Bitcoin, leading to a price appreciation of the asset.
The end of the rate hike cycle and a return to lower interest rates could also reinforce the bullish narrative. This could bring back investors’ appetite for high-risk/high-return assets like Bitcoin and thus increase the coin’s popularity and appeal as a viable investment option.
The aforementioned spot Bitcoin ETF applications filed by major investment companies like BlackRock are something to keep an eye on as well. If these requests are to be approved, Bitcoin would be able to bolster legitimacy and garner massive attention from stakeholders, which would obviously increase the chances for a new bull run.
The case for skepticism
If we were to focus only on the positives, we could already see Bitcoin as the big winner of the cryptocurrency industry in 2023. Unfortunately, things are never as simple as one would like them to be when it comes to crypto.
On the negative side, an influx of coins looming on the horizon could spell trouble for Bitcoin. Analysts point out that the defunct Mt. Gox, a once-popular exchange platform that collapsed in early 2014, might finally receive compensation for its lost BTC and pay its creditors. The total sum that will be distributed among creditors would amount to approximately 138,000 BTC, equating to around $3 billion. Part of the BTC seized by the U.S. government in March this year might also hit the market soon, with nearly $1.2 billion worth of BTC still waiting to be sold. A sudden influx of coins in the market could increase the selling pressure and cause the BTC price to drop.
Criticism regarding Bitcoin’s environmental impact and the increasing crypto crackdown are also making it harder for the flagship crypto to gain a solid footing and get back on a rising trend. There’s a lot of uncertainty surrounding Bitcoin at the moment that’s hampering its evolution.
As for the enthusiasm around spot Bitcoin ETFs, one should not forget that the U.S. Securities and Exchange Commission hasn’t approved any applications so far due to the risk of market manipulation. An unfavorable decision can cause investors to lose confidence in Bitcoin’s potential and lead to a sell-off.
Wrapping up
It’s hard to say if Bitcoin’s future looks more bearish or bullish. Given the multitude of factors that play a key role in its evolution, both scenarios are just as plausible. So, the only thing that traders and investors can do for now is monitor these influences and hope that Bitcoin will be strong enough to continue its recovery journey.