Is Bitcoin set for further price increases in 2023?
Bitcoin price shows similarities with 2019
Bitcoin has been on a strong bullish run since the beginning of 2023, recording an increase of over 80%. The big question is whether there is still room for further price increases for the rest of the year. Analyst Vetle Lunde of K33 Research sees many similarities with the recovery that the king of crypto underwent in 2019.
In his recent update, Lunde stated that the market saw a lot of forced sales in the latter part of 2022, and investors have become more cautious due to recent crypto events. This has led to ‘underexposed’ investors and many people being conservative with increasing exposure or even shorting the market. This, in turn, resulted in short squeezes and an increase in Bitcoin prices as short sellers had to liquidate their positions.
Market sentiment could improve
Overall, Lunde expects the market sentiment to turn and sees a Bitcoin price of $45,000 in May 2023. However, that requires an additional 50% price increase on top of the already realized 80% increase this year.
Lunde sees a slight improvement in market sentiment due to signals that the US central bank may reduce its hawkish stance and inflation figures providing a glimmer of hope for improvements in the markets.
- Advertisement -
Recently, Bitcoin bulls were able to test the resistance zone at $30,000. This zone is an important obstacle and psychological level in the long term. At the time of writing, Bitcoin trades just below $30,000.
Factors Driving Bitcoin Price Increases
While many factors can influence Bitcoin prices, several key drivers have particularly stood out over the last year:
Increased Institutional Adoption
Many institutional investors are now allocating a portion of their assets to Bitcoin, which is a clear indication of its growing mainstream adoption. The decision of Tesla and other major companies to invest in Bitcoin further boosted institutional adoption.
The Bitcoin halving event in May 2020 cut the block reward in half, reducing the supply of new Bitcoin to the market. This event also reduces inflation and provides a deflationary effect on the supply of Bitcoin, which significantly drives up its value.
Market demand for Bitcoin has risen significantly as people continue to seek safe-haven assets amid economic and political instability. Bitcoin’s finite supply and decentralized nature make it an attractive investment option that cannot be manipulated by governments or central authorities.
- Advertisement -
The development of new technological solutions such as the Lightning Network, Taproot, and the implementation of the Schnorr signature plays a significant role in increasing Bitcoin’s functionality.
Global Economic Uncertainty
The COVID-19 pandemic led to numerous economic and geopolitical challenges, which increased global economic uncertainty. Many investors sought refuge in Bitcoin, which is resistant to inflation and other economic uncertainty.
The price of Bitcoin has shown significant price gains since the beginning of 2023, suggesting that it may have more room for future price increases. The market sentiment has also slightly improved, helping the current bullish run. Several factors such as increased institutional adoption, technological innovations, global economic uncertainty, the halving event, and market demand have contributed to Bitcoin’s rise in value. However, factors such as regulation and geopolitical risks could potentially hinder future adoption, so investors should approach Bitcoin with caution and always conduct their own due diligence before investing.