Bitcoin has slowly made a return into investors’ portfolios after significant sell-offs and slumping investor trust, according to analysts such as Anthony Pompliano. They point to increased demand through spot Bitcoin ETFs approved by the SEC in January as evidence.
Other factors have also played a part in fuelling this newfound optimism, such as an imminent Bitcoin halving event and hopes of looser monetary policy.
The Bull Run Continues
Investor optimism remains high, with most believing the US economy will avoid recession this year according to CNBC Delivering Alpha’s survey. But investors must remember that all bull runs must come to an end at some point – no matter how bullish investors might seem.
The fourth quarter is generally seen as an especially promising period for Bitcoin prices, according to experts. One theory behind this cyclical behavior could be buyers trading heavily toward the end of each year as they set portfolio allocation goals.
An ETF could also increase interest in Bitcoin, though that has yet to happen. Bulls continue to dominate the market and appear poised to extend their gains for at least the rest of 2023, and indicators suggest continued expansion into 2024; such indicators include positive scalability scores and rising Z-Scores which measure value multiplied by current market price.
The Halving Is Near
The halving, or reduction in rewards miners receive for each block they complete, is expected to have a profound effect on Bitcoin’s value. As mining becomes less lucrative and miners gradually reduce production costs or shift transaction processing power elsewhere – leading to less mining activity overall and eventually less miners in total, according to cryptocurrency investor and analyst Mark Baker. Miners may seek ways to save money through production cost reduction or shifting transaction processing elsewhere, according to Baker.
Cryptowatchers believe the halving will likely spark another substantial rally in Bitcoin prices, since it will reduce the rate at which new coins enter circulation compared to fiat currencies where central banks can print more whenever needed.
However, halving may not be the sole driver of this bull run; investors could also be anticipating rejection of ETF applications by US SEC this month, forcing Wall Street investors to search for alternative investments which could send BTC prices higher.
The Potential for a New All-Time High Is Present
Bitcoin’s surge can be attributed to various factors. Notably, ETF approval and the halving event have both contributed, with analysts also noting increased retail interest in this space driving its performance upward.
Bitcoin has also benefited from expectations that central banks will cut interest rates later this year, in an attempt to stimulate economies and reduce inflation, raising its appeal as both an asset store and form of money.
PayPal (PYPL)’s announcement that their 350 million users and 20 million merchants could buy, sell, hold and use Bitcoin has further spurred demand. Analysts predict this move could spur institutional investor demand and further boost prices; though an eventual correction still seems likely as Bitcoin remains far below its all-time high of $69,000 set last November due to high-profile scandals and collapses such as that involving world second largest exchange FTX’s collapse.
The Future Is Looking Bright
Bitcoin has enjoyed an excellent run since breaking through $5,000 level, increasing investor excitement about cryptocurrency investing. This surge is partly driven by SEC approval of spot bitcoin ETFs and speculation over potential interest rate cuts by central banks.
As Bitcoin continues its bullish momentum, analysts predict its price may experience further increases. They believe its market will benefit from greater adoption of digital assets and recognition of their role within global economy.
Furthermore, this bull run has also propelled other large-cap digital assets, including Ethereum (ETH) and Solana (SOL), one of the fastest-growing cryptos this year and expected to keep rising through 2023. Solana currently trades at $2,661, an increase from its initial value of $114; accordingly BNB Coin purchases via Binance Exchange platforms has seen their value soar significantly as well.
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