The crypto market is still highly volatile and subject to fluctuations, affected by regulatory changes, adoption by institutional investors, and the macroeconomic environment.
Bitcoin, the world’s largest digital currency, surged last week, breaking past the $25,000 mark and reaching a new high for 2023. This was an almost 60 percent gain for the cryptocurrency from the low of $15,742 in 2022 following the FTX crisis in November. Bitcoin’s value has been increasing steadily since then.
The last time Bitcoin was at a similar level was in mid-June of 2022, after which it stagnated for a prolonged period, with values hovering in the $19,000 to $21,000 range for several months. The cryptocurrency is still well below its peak of $68,992, which it reached in November 2021.
Experts said that while the surge above $25,000 was a positive sign, the market remains susceptible to sudden changes. They advise investors to remain vigilant and prepared to react quickly to market movements.
According to Ben Sharon, cofounder of LumiShare SRG, factors such as regulatory changes, geopolitical tensions, and the performance of major players like Bitcoin will all have an impact on the market, which looks positive at this stage. “The bull market will begin within the next two quarters,” Sharon told Moneycontrol.
Matter of regulation
Another market analyst said Bitcoin is still largely misunderstood or misrepresented and the real question for investors is how regulatory authorities treat the cryptocurrency ecosystem.
Nathan Thompson, a lead tech writer at Bybit, noted that Bitcoin is currently traded as a risk asset and is affected by many macro factors. These include inflation, recession, and general discourse, which have a direct impact on the price of cryptocurrency.
Thompson emphasised that Bitcoin and other blockchain-based assets are a net gain in terms of access and efficiency and if allowed to flourish, they will increase productivity and growth worldwide. Sean K. August, CEO of The August Wealth Management Group, said crossing the $25,000 mark is a significant milestone for Bitcoin, which could potentially continue to rise in the short term.
However, the future of Ethereum, the second-biggest cryptocurrency by market capitalisation, may depend on factors such as the adoption of the Ethereum blockchain and the launch of new projects and applications.
August said the crypto market is highly volatile and subject to fluctuations, influenced by factors such as regulatory changes, adoption by institutional investors, and the macroeconomic environment. Modulus CEO Richard Gardner notes that the macroeconomy is only moving the market for the short term, and the real question for Bitcoin investors is how regulatory authorities will treat crypto.
Until there is regulation, the sector will be stuck in a holding pattern. Gardner predicts that crypto will truly break free in a meaningful way only when regulatory authorities provide oversight.
Intergovernmental blockchain expert Anndy Lian said the recent surge in BTC price cannot be attributed solely to its intrinsic value – it is also heavily influenced by the current global economic climate. Bitcoin is viewed as a safe haven asset and its decentralised nature makes it an attractive option for those who are sceptical of traditional financial institutions.
Whitney Setiawan, a research analyst at cryptocurrency exchange Bitrue, has predicted that the current market for Bitcoin and Ethereum could signal the start of a bull run in the near future. According to Setiawan, the crypto market is influenced by factors such as inflation slowing globally and the US Federal Reserve taking a slightly dovish tone.
Setiawan cited the bottoming of crypto prices and the buy-on-the-dip mentality of traders as the main drivers for the recent price surge. Setiawan noted that historically, bear market rallies with a parabolic upward movement are quite common before a substantial decrease in price, and this could be the case this time as well.