Bitcoin forecast for 2023

Supply and demand

This is the key factor that determines the price of any asset. Diamonds are expensive because they are made of diamonds, which are rarely found in nature. Hypothetically, if their quantity on the exchange increases, the value of the commodity will proportionally decrease. The market law is the same – the higher the demand, the more expensive the asset.

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Bitcoin issuance is limited to 21 million coins. About 18 million BTC have now been mined, and with limited supply and high demand, the value of the asset will increase. Every 10 minutes, miners open a new block on the Bitcoin network, earning rewards.

Right now, the No. 1 cryptocurrency is affected by inflation, but once all BTC is mined, the depreciation will stop.

Competing with altcoins

Bitcoin remains the dominant asset in the digital segment. However, the emergence of new high-tech altcoins is systematically reducing the demand for BTC. The decentralized finance(DeFi) sphere in terms of capitalization has increased to $100 billion since 2019, continuing its positive trend. Bitcoin’s main competitor is Ethereum and, according to experts, it will become the market leader in the foreseeable future.

Pumping

The BTC rate for 2023 also depends on such a phenomenon as Pump. This is a mass purchase of coins on the exchange in order to artificially increase demand and value. There are two types of pumping:

• Short-term. Quotes grow rapidly at once by tens of percent. The rate stops at the extremum, then decreases to the initial values. To implement such a strategy, BTC is rarely used, because its exchange value is high.
• Long-term. This process is more labor-intensive. A few months before the development of the pampa, information about the impending growth of the cryptocurrency is spread in the network. As confirmation, fictitious, but plausible news is given. Speculators buy up the asset at the lows, forming reserves for the manipulation of quotes. Such a rush lasts from several hours to a day depending on the preliminary preparation.

Information frenzy

The main news agenda today is the legislative regulation of the sphere of cryptocurrencies. Any data, be it tightening of rules for importing mining chips into South Korea or Germany’s recognition of digital assets – everything affects the state of the market. Infrastructural news is also important: the appearance of new ATMs, simplification of the registration procedure on exchanges, interaction with global organizations, recognition of cryptocurrencies as a means of payment – which positively affects the exchange rate of bitcoin.

News about hacker attacks does not bring anything good to the market. While BTC is a relatively safe asset, altcoins are constantly fighting for investors’ trust. Convincing ordinary traders in the reliability of this sphere is an important, but not easy task. It is also worth taking into account the “crowd effect”, which is formed by news. An investor, having found certain information in the network, will share it with acquaintances, and they will do the same. The data will be actively distributed among users, which will affect the value of bitcoin.

For example, Western Union announced in February 2018 that it was interested in Ripple and wanted to test its capabilities in practice. This simple statement created a stir that led to a 110% increase in the price of XRP in a week. Investors thought the cryptocurrency had been legitimized as a major organization openly endorsed it. This stimulated demand, which favored the quotes.

Speculation

Speculative actions of market participants are responsible for the high level of volatility of BTC. Aggressive traders are not interested in cryptocurrency from an investment point of view. They have one task – to earn more profit in a short time. The lack of legal restrictions and the small scale of the digital asset market allow using scalping strategies, extracting profits against the background of price fluctuations. It is worth considering that the actions of speculators directly affect the volatility of bitcoin.

Issuance and Halving

Halving is the principle of building information chains in the blockchain, which periodically reduces the remuneration of miners. This is necessary to minimize the impact of inflationary processes.

The BTC issue is set at 21 million coins, and every 4 years the reward for mining is reduced by 2 times. This reduces the available market supply, which, in conditions of high demand, will determine the growth of the value of cryptocurrency. Tentatively, all Bitcoins will be mined by 2140.

Other factors

There are a number of related variables that tangibly affect the market dynamics of cryptocurrency. For example:

• Mining costs. Mining coins is an energy-consuming process. The more market participants mine cryptocurrency, the higher the total power of the network, but also the complexity of the calculations grows. If we talk about mass mining, the cost of electricity directly affects its profitability.
• Legal regulation. Crypto coins are characterized by anonymity and lack of control. Attempts by countries to control the segment of digital currencies affect the value of bitcoin.
• Futures contracts. This instrument is used to diversify risks and earn on price fluctuations. The interest of market participants in derivatives backed by cryptocurrency increases the demand for digital assets.
• Hardfork. Price fluctuations depend on the stable operation of the underlying software. Sometimes changes need to be made to the blockchain code and users need to support this process. If part of the miners do not agree with the changes – they continue to work with the original blockchain. In this case, the changed blockchain is the basis for a new asset, for example: Bitcoin Cash, Bitcoin Gold, BitEthereum.

Why bitcoin will not reach $100,000 in 2021

Last year, many experts expressed confidence that BTC would reach the announced mark in a short time. This did not happen for reasons such as these:

• A complete ban on working with digital assets in China.
• Legal regulation of cryptocurrencies in America was moving toward tightening.
• It was uncertain whether hash rates would recover online amid the tough stance of Chinese authorities. Investors did not understand how the world’s mining capacity would be distributed and who would become the industry leader.
• Growing inflation in many countries reduced the demand for cryptocurrencies, market participants prioritized protective assets (precious metals, bonds, bank deposits and the U.S. dollar).

Bitcoin value forecast for 2023 from experts

At the beginning of the year, Goldman Sachs analysts suggested that quotes will reach $100,000 within a few months if bitcoin reduces the market share of gold. In their opinion, the popularity of BTC among institutional investors will become a springboard for the formation of a sustainable bullish trend.

Bloomberg and Bank of America experts expect the exchange rate to rise to $75,000 by mid-2023.

However, much will depend on the Federal Reserve’s monetary policy and the acceptance of digital assets as an alternative to fiat money.

The bullish scenario is held by analysts from JP Morgan. They believe that BTC will settle near the $145,000 level by the end of this year. Experts suggested that this is possible if Bitcoin will squeeze precious metals from their positions. The asset retains the potential to strengthen, but in the unstable geopolitical and macroeconomic environment, growth will be limited.

Stochastic Oscillator is located near the oversold area, trading volume is decreasing. If the price consolidates above the support level of $30,968, the quotes may return to the global high of $66,960 in the long term.

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