Bitcoin on the rise suggests it’s not over for cryptocurrencies

To say that 2022 is a disastrous year for cryptocurrencies would be an understatement.

After a series of high-profile collapses from stablecoins to crypto exchanges, investors entered 2023 with a mixture of fear and resignation.

However, it seems that cryptocurrencies may be falling out of a difficult situation as Bitcoin, Ethereum and several other cryptocurrencies have started to rise.

Today, the price of Bitcoin has risen by at least a third more since the start of the year.

Is this a fluke, or has the dreaded ‘crypto winter’ begun to thaw to give way to summer?

Has Bitcoin Turned Bullish?

Although the crypto market is still far from its peak of nearly $3 trillion in November 2021, there are signs that things are looking up.

Bitcoin, one of the largest and most popular cryptocurrencies by market capitalization, is experiencing an unexpectedly strong start to the year.

The question is why.

For starters, it could be because the US Federal Reserve slowed the pace of interest rate hikes, which helped Bitcoin maintain its upward trajectory and outperform other asset classes.

In addition, analysts feel that favorable market conditions (ie, US inflation slowing for the seventh month in a row) could lead Bitcoin to recover some of its losses in 2023.

According to Nigel Green, CEO of financial advisory firm deVere Group, we may technically still be in a bear market, but the signs are that the bulls are starting to take back control.

Halving – a key event for Bitcoin

But a more likely reason behind the bullish behavior is the once-every-four-year Bitcoin halving event, which is set to take place in 2024.

Currently, miners get 6.25 BTC for each mined Bitcoin block. This number will decrease to 3,125 BTC next year at the halving.

As a result of the halving cycle, the supply of available Bitcoins in the market decreases, increasing the value of Bitcoins.

For that reason, the halving is a monumental event that will help lift Bitcoin prices out of hibernation.

And judging by historical data, investors can expect an increase in Bitcoin’s pricing in the months following the halving.

In fact, commodity guru Mike McGlone believes that Bitcoin could reach six figures within a couple of years.

I fully expect Bitcoin in the next couple of years, probably around the halving, maybe 2025, to hit $100,000.

Senior Commodity Strategist at Bloomberg Mike McGlone

Finally, survival of the fittest is an evolutionary theory that extends to cryptocurrencies.

The shock waves of 2022, while devastating for investors, should be seen as an industry-wide detox to get rid of the black sheep and the weak players.

Raoul Ullens, the co-founder of Brussels Blockchain Week, seems to think so too.

“An unhealthy ecosystem will not attract the masses. A fall in the crypto asset markets is not only necessary, but also healthy, and likewise helps to rebalance the valuation of cryptocurrencies,” he said.

Cryptocurrencies are not going away

Bitcoin and other cryptocurrencies may have suffered the worst year, but their biggest fans are more than aware of the risks associated with this volatile investment and are choosing to take the plunge anyway.

And considering the growing interest in the metaverse, cryptocurrencies will continue to be used as a digital currency for transactions in the digital space.

In addition, it is likely that we will see the development of central bank digital currencies (CBDCs) in the future, a move that will give digital assets more credibility.

Therefore, while the Monetary Authority of Singapore (MAS) may have deemed that the case for CBDCs in Singapore is not compelling enough after a pilot study, they have not ruled out the possibility in the future.

For those who don’t mind gambling, it might not be such a bad idea to dip your toes into crypto right now.

Remember, just don’t put all your eggs in one basket.

Featured image credit: Nasdaq