After a challenging 2018, Bitcoin is off to a strong start in 2023, but whether the current recovery will convert into a prolonged bull run and expand to the wider crypto market is still unknown, according to the opinions of various industry insiders.
According to CoinGecko, the value of the asset has increased by a staggering 40 percent over the course of the previous month, and it has successfully broken through the $20,000 barrier. On January 31, the price of a single bitcoin was approximately $23,000.
Many people are breathing a sigh of relief as a result of this development; however, the price of the asset is still a long way off from its all-time high of $69,044.77, which was reached on November 10, 2021. This marks a fall of 66.5%.
According to James Butterfill, head of research at CoinShares, the surge is mostly driven by recent macro events such as lower inflation data from the United States and Europe. These data signal that monetary policy is going to be significantly more lenient in the coming year.
Following a year in which very aggressive monetary policy action was taken, investors are now seeing opportunities in the cryptocurrency market, according to Butterfill. “Because Bitcoin and, more generally, crypto assets are perceived as a monetary policy inflation hedge,” Butterfill added. After the FTX, we have seen that Bitcoin has finally recoupled with macro data, ignoring the negative news from Gemini and Silvergate.
Butterfill stated that he anticipates only moderate growth over the first half of the year, despite the fact that interest rates are continuing to climb and there is a possibility of flare-ups brought on by the failure of FTX.
“But as the United States and Europe face a recession and potential interest rate cuts are seen,” he said, “this is likely to prompt a more sustained rally in Bitcoin in the second half of 2023.” [Citation needed] “But as the U.S. and Europe face a recession and potential interest rate cuts are seen.”
Some Anticipate a Steady Ascent Back Up
It is also largely due to the policies of the Fed and the continuous softening of inflation, which is another factor that contributes to the fact that opinions are divided on the path that the price will take.
“Despite the fact that they seem like they should be an inflation hedge, there is no reason to believe that Bitcoin and, to a lesser degree, Ethereum will become disconnected from the traditional financial markets any time soon,” said Arie Trouw, co-founder of XYO Network. “There is no reason to believe that Bitcoin and, to a lesser degree, Ethereum will become disconnected from the traditional financial markets any time soon.”
Regarding whether or whether this rally will proceed, there is a wide range of opinions. Some people, such as Trouw, have stated that even if we are at the start of a bull cycle that will last for a longer period of time for the digital asset business, it will feature a more gradual ascent than in past cycles.
“I also believe that 2023 will be the year of the great reckoning for crypto, where eighty percent of assets will fade because they lack substance and the twenty percent that remain will gain immensely,” he said. “I also believe that 2023 will be the year of the great reckoning for crypto.” “The similar trend occurred after the dot-com crash, in which hollow companies that consisted of little more than a domain name failed, while the few companies that had solid businesses prospered.”
Not Yet a Bull Market
Some people are more cautious and argue that even though the return of digital assets demonstrates the resilience of this market, it is too soon to label this a bull market. They say this since the rebound of digital assets occurred so recently.
The market appears to be recovering from having been considerably oversold, according to Joe Ziolkowski, CEO and co-founder of Relm Insurance. “What we seem to be experiencing, at least to a great extent, is the market recovering from having been extremely oversold,” Ziolkowski said.
“As prices dropped to all-time lows, it was obvious that retail and institutional purchasers took advantage of the chance to accumulate a range of crypto assets,” said one analyst. “[T]he market as a whole seemed to be in a state of panic.” It would indicate that a portion of this recovery is comprised of these assets coming closer to their mean levels historically.
In the meantime, a number of industry experts are of the opinion that, even though the cryptocurrency market is experiencing something of a recovery as a result of rapidly shifting macroeconomic factors, the most important thing would be to concentrate on the longer-term development of cryptocurrency protocols like Ethereum.
For instance, John Paller, the founder of Opolis, has stated that a lot of market analysts appear to underestimate exactly how much developer activity is happening on this network. This includes the different scaling solutions that are making the overall Ethereum ecosystem faster and cheaper to use.
He said, “A lot of new applications are being developed right now, including in the gaming and DeFi spaces, and I suspect that in the coming years we will see a surge in user activity because of the next-generation protocols that are getting created right now.” “A lot of new applications are being developed right now, including in the gaming and DeFi spaces,” he said.
“However, in order for these procedures to be properly built out, it will take some time. And until that time comes, it is essential to keep one’s “eye on the goal” and concentrate on increasing one’s utility in order to attract a larger number of customers to this sector of the economy. It is taking place, but the moment to construct, construct, and construct is now.