Bitcoin started its 2023 in the best possible way Price The crypto is up about 28% against the dollar (USD). In fact, last Saturday Bitcoin reached $21,000 for the first time in months.
Of course, the summit is still a long way away. But news of a positive rally is optimistic across the industry. The whole industry is worried about inflation, news like this is great for feeling positive about the future.
Why has the Bitcoin (BTC/USD) price increased?
Last year was not a good one for the cryptocurrency ecosystem amid scandals and bankruptcies in the industry. the collapse of FTX caused a very large industry overhang, not to mention the monetary situation in terms of inflation.
One thing that is clear without a doubt is that the FTX meltdown has had a major impact on the market and has resulted in the bankruptcy of several companies including the Winklevoss twins’ company, Gemini.
It has created new problems and destroyed users’ trust in the crypto world. However, the entire market crisis of 2022 is not exclusively related to FTX, which led to the collapse of many exchanges, the loss of many tokens and the failure of much of the market.
Inflation and the major setback of the broader market tied to central banks were also the dominant factors behind the decline in 2022.
Crisis that caused bitcoin and other cryptocurrencies to break above minimum support and move away from full value achieved from 2020 to early 2021.
Still, analysts are proactive; In fact, it is believed that several factors will lead to an increase in the short term Bitcoin.
Factors include a high probability that interest rates will fall, there could be talk of a new monetary policy.
In fact, inflation is calming down and economic indicators are showing positive signs, particularly in the United States. Traders are optimistic that a slowdown in inflation would mean a potential trend reversal and finally an end to the bear markets.
US inflation data give positive signal
The end of 2022 brought a slow slowdown in inflation, indeed the consumer price index fell by 0.1% in December, in line with expectations. The main reason inflation eased was a sharp drop in gasoline prices, which are now lower on an annualized basis.
In 2022, inflation ended the year with a significant drop. Consumer prices have seen one of the sharpest falls since the pandemic began.
The CPI, which measures the cost of a broad basket of goods and services, fell 0.1% over the month, in line with the Dow Jones estimate. This is the biggest monthly drop since April 2020 as most of the country went into lockdown to fight Covid.
Curbing inflation is one of the goals for 2023. If consumer prices continue to fall and inflation is better managed, the market has potential for growth.
“The key macro data that investors are focusing on is the weak Services Purchasing Managers’ Index and the downtrend in Employment and Payrolls data. This coupled with a downward trend in inflation has resulted in an improvement in confidence as it comes at a time when valuations for bitcoin are… close to all-time lows. The prospect of looser monetary policy amid weaker macro data and low valuations has fueled this rally.”
So said James ButterfillHead of research at digital asset management firm CoinShares.
Bitcoin Prediction
Last week’s incredible rally marks a possible recovery for Bitcoin. After a long time, the currency is moving above $20,000. Despite concerns about the global economy, Bitcoin is up +28% this week, hitting one of its highest points in recent months.
The event gave a glimmer of hope to investors who are braced for the end of the bear market and the start of a new positive trend. Meanwhile, the total crypto market cap is slowly approaching $1 trillion.
Bitcoin short-term predictions see Bitcoin touching the new $25,000 resistance by April. Should inflation fall, Bitcoin’s potential growth would skyrocket.
“Bitcoin appears to have pegged back to macro data as investors shrug off FTX collapse.”
concluded James Butterfill.
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