2022 turned out to be a difficult year for both Bitcoin and the entire crypto market. A series of collapses and crashes had a negative impact on the rates of most coins and tokens. The crypto industry is constantly changing and developing — thus, experienced traders are no longer surprised by new changes and crashes as they simply get used to them.
Since the new year has come, it’s time to make a bitcoin price prediction. In this article, we will analyze the factors that affect the bitcoin rate and its cycle, the analysis methods on whose basis forecasts are made, as well as consider expert opinions. Let’s get started!
What Happened to Bitcoin in 2022?
The year 2022 began with the $46,000 price range, to which the rate dropped after reaching a new all-time high in November 2021.
Bitcoin did not maintain at this price level for a long time and quickly went down. An important role was played by the temporary suspension of mining activities in Kazakhstan, which occurred due to a power outage during protests in the country.
The rate fluctuated in the range from $48,000 to $36,000 until April came. In the spring, the price decline was caused by an increase in interest rates by the US Federal Reserve and by the collapse of the Terra ecosystem. From June 10, the rate never returned to $30,000 and fluctuated from $24,500 to $20,000 until November.
In November, a new stage of declines took place, which was caused by a scandal with Sam Bankman-Freed in the title role. The bankruptcy of FTX and other exchanges and platforms led to the bitcoin price decreasing from $20,000 to $16,000-$18,000.
On December 31, 2022, 1 bitcoin was worth $16,603. Starting on January 9, 2023, the price began to rise and reached $18,244 by January 12, 2023.
Currently, the rate is at the $22,700 price level.
Once we recall what happened to bitcoin in 2022, let’s move on to what awaits the crypto market in the new year. Still, it is important to remember that any predictions and forecasts may not come true due to unforeseen circumstances, as in 2022. Make sure to keep this in mind when making your investment decisions.
What Affects Bitcoin (BTC) Price?
If we simplify the mechanism that affects the price of bitcoin as much as possible, it turns out that the rate depends on supply and demand. Still, the most important thing is what is behind supply and demand.
Supply and demand are caused by various factors that affect investors. These factors can be divided into short-term and long-term. For example, every year, cryptocurrencies grow in price by the Christmas holidays.
This factor is short-term, as it works only during the holidays and does not affect market cycles and market sentiment in general.
News can also be attributed to such factors. The news provokes demand or stimulates sales but does not necessarily have a long-term effect.
Therefore, let’s analyze the factors that have a real long-term effect and serve as a basis for making price forecasts.
US Federal Reserve Rate Change
The base rate of the US Federal Reserve has an inverse correlation with the bitcoin price. When the rate goes up, bitcoin goes down, and vice versa. This dependence could also be seen in 2022, as mentioned earlier.
The correlation between the base rate and bitcoin price lies in the fact that the actions to change the rate are related to the current market situation. Roughly speaking, when the economy is going well, the rate decreases. Therefore, this positively affects the price of bitcoin, as it is a risky asset in which most people invest during more stable times.
When a crisis comes, the rate rises since it is an instrument of monetary policy. As a result, investors switch to more reliable assets and reduce their share of risky ones.
Halving plays a crucial role in the Bitcoin market cycle. Based on it, experts make long-term price forecasts.
The Bitcoin cycle lasts about 4 years; it goes from halving to halving and consists of alternating rise and fall. Naturally, there is also sideways movement, but it relates to a bullish or bearish market cycle. On average, a growth lasts 1.5 years, and a fall — 2.5.
About a year after a halving, bitcoin usually hits its all-time high. This happened in 2017, after the 2016 halving, and also in 2021, after the 2020 halving.
Crypto Industry Regulation
Nowadays, cryptocurrencies are still not recognized by many large countries. This fact does not have a positive impact on the crypto market. Also, the proceedings with large crypto companies negatively affect the crypto market.
The tightening of control negatively affects users and the development of many projects. This fact is also taken into account when predicting the industry growth, including the bitcoin rate.
The State of the World Economy
Large-scale world events leading to a deterioration in the state of the economy also affect bitcoin. Crises impact the community and investors since, in difficult times, people invest less or try to transfer assets to more stable and reliable sectors. Since bitcoin is included in the category of risky assets, many investors withdraw their BTC savings during a crisis.
Bitcoin (BTC) Price Forecasts 2023
BTC price forecasts for 2023 are very diverse. We have collected a selection of expert opinions with different positions: from the most positive to the most negative ones. Let’s get started!
Positive BTC Price Predictions
Tim Draper, the co-founder of venture capital firm Draper Fisher Jurvetson, predicts that the bitcoin price will reach $250,000 in mid-2023. Initially, this prediction was focused on the end of 2022, but in November, Tim Draper announced an extension of the forecast deadline.
Alistair Milne, the founder of Altana Digital Currency Fund, predicts that the price of bitcoin will rise to $45,000 depending on what happens with inflation.
Mike Novogratz, the founder of Galaxy Digital, predicts the end of the bearish phase during the first half of 2023. He expressed his position in an interview with Yahoo Finance. He connects the future beginning of the bitcoin growth with the suspension of the increase in rates by the US Federal Reserve: when this happens, then the phase of the market cycle will change.
University of Sussex finance professor Carol Alexander has predicted that the price of bitcoin will rise to $30,000 in the first half of 2023 and eventually reach $50,000 by the end of the year. Considering that her prediction last year about bitcoin bottoming out at $10,000 was not too far off the mark, many traders believe her statements.
Eric Wall, CIO at crypto hedge fund Arcane Assets, believes that the $15,400 price of bitcoin was the bottom and predicts that the price will break the $30,000 mark this year.
PlanB, an analyst and author of the Stock-to-Flow model, believes that the fall to $15,500 in November was the bottom. He predicts that bitcoin will rise:
Negative BTC Price Predictions
Mark Mobius, the founder of Mobius Capital Partners, said in early December that Bitcoin would continue to fall to a low of $10,000 in 2023. His forecast builds on the future tightening of the US Federal Reserve’s monetary policy and interest rate hikes, which will further undermine the bitcoin market.
Mobius’ prediction was confirmed by VanEck Investments. Matthew Siegel, head of digital asset research, says bitcoin will hit $10,000-$12,000 in Q1. He cites higher energy prices and Ripple’s SEC lawsuit as key drivers for the ongoing decline.
Standard Chartered has predicted that bitcoin prices will drop to $5,000. The head of research at the bank, Eric Robertsen, said that an increase in the number of bankrupt crypto firms and exchanges is leading to a drop in investor confidence in digital assets and their sales.
The European Central Bank was even tougher in its assessments. In November, it was reported that bitcoin is on the ‘road to irrelevance’ due to the latest price swings and 2022 volatility.
Analyst Michaël van de Poppe has suggested that bitcoin will rise to $30,000-$40,000 during the first half of 2023.
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Summing up experts’ opinions, we can conclude that there are no real prospects for a significant increase in the bitcoin rate in the first half of 2023.
Forecasts about BTC price reaching $250,000 in the first half of the year look extremely unrealistic, as well as the opinion about the end of the crypto winter.
We can expect price changes from $5,000 to $30,000. Most experts are inclined to believe that bitcoin will still fall to lower levels.
Based on this, we can assume that in the near future, Bitcoin will return to decline to $10,000, after which it will be able to recover to $30,000.