- Bitcoin price tumbled in 2022 as interest rates rose and FTX collapsed.
- BTC has numerous catalysts in 2023 including a Fed pivot.
Bitcoin price had a terrible performance in 2022 as cryptocurrencies and growth stocks plunged. BTC tumbled by 65% during the year while the tech-heavy Nasdaq100 index plunged by over 30%. Well-known tech names like SoFi, Robinhood, and Coinbase stocks dropped by more than 70%. Here are the reasons why BTC will recover in 2023.
Bitcoin has seen worse before
Bitcoin price plunged from almost $70,000 in November 2021 to about $15,500 in November 2022. That was a spectacular decline. However, BTC has seen worse declines before. It dropped by 84% from its highest point in December 2017 to its lowest level on December 1 2018. In this period, it moved from $19,000 to $3,128.
Further, BTC price dropped by 72% from its highest level in June 2019 to its lowest point in March 2020. In this time, Bitcoin dropped from $13,790 to about $3,197. Therefore, this decline is a sign that BTC goes through boom and bust cycles. While historical performance is not always a good signal for future performance, there is hope that BTC will rebound.
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Bitcoin price and stocks correlation
Another reason why BTC price will rebound in 2023 is that the latter was not the only asset to drop. The Nasdaq 100 index crashed by over 30% in 2022 while the Dow Jones and S&P 500 declined by over 15%. Bond yields also surged to the highest point in years.
Historically, stock busts have been followed by a steady recovery. Stocks surged after the 2008/9 Global Financial Crisis (GFC), Dot Com Bubble, and the Great Depression. Therefore, a stock rebound will be a positive catalyst for Bitcoin price rebound.
Done with Irrational exuberance
The Bitcoin price sell-off has pushed many speculators and traders out of the market. According to the Wall Street Journal, rookie traders who helped push stocks and crypto prices higher are quitting. That is a positive thing for Bitcoin since it leaves the real believers of the coin as holders. A good example of this is MicroStrategy, which has continued buying the dip.
Fed pivot likely
Another reason why Bitcoin price could jump in 2023 is the possibility of Fed pivot. While rates are expected to remain at an elevated level in 2023, analysts believe that the bank will start implementing a pivot in 2023. Others expect it to cut interest rates in the fourth quarter of the year. As we have seen recently, hopes of a pivot have led to some gains recently.
Bitcoin hashrate has held quite well
Finally, Bitcoin price could rebound because of the rising health of the ecosystem. Data shows that Bitcoin’s hashrate has held close to its all-time high. Hashrate is important data that measures the computational power of a blockchain. A higher number is a good indication of the health of the network.
