Bitcoin (BTC) has been hovering precariously in the $29,000 region for over a month after showing a steady 11% increase during the same period. Such dynamics, after a protracted market freeze, could be signaling the possibility of a major bull run at the slightest hint of positive news backgrounds, especially from the regulator and institutional ends.
The vaunted $30,000 mark is seen as a serious resistance for Bitcoin’s price, which is evidenced by the recent rush of thousands of BTC holders to fix their profits in recent months. A total of a record $80 million were liquidated off the market in perpetual futures positions on April 26, giving the bears a good reason to start pondering the possibility of a price breakout in the very near future.
The events of late 2022 and early 2023, including the collapse of the FTX exchange, are likely the main drivers of long-term investor sentiments and market momentum. As the price of BTC continues to pick up the pace, the meager balances of crypto exchanges, which currently number a total of around 2.19 million BTC, are good evidence of ongoing accumulation of reserves before an impending appreciation of the asset.
Institutional investors are also in the same league, with the likes of MicroStrategy (MSTR) stockpiling an additional 7,500 Bitcoins to their portfolios in the last two months, bringing the total holding to around 140,000. With that number equaling approximately $4.1 billion at the current price, there is reason to believe that the company’s analysts are expecting a major price increase. The domino-like collapse of the banking sector in the United States is only fueling such belief as confidence in alternative value storage instruments like Bitcoin starts gaining weight.
Historical data on Bitcoin’s price performance is strong evidence to suggest that the current price will either be maintained or will go on the offensive by May. The saying “sell in May and forget” is proof thereof, though the market can decide to take a dip at any time as well.
Most analysts are convinced that Bitcoin is “destined” to reach a price level of around $40,000-45,000 in the third and fourth quarters of the year. The foundation for such anticipation is the ongoing search for bullish events in the market that could trigger a price increase. However, many experts are convinced that both institutional and retail investors should come to terms with Bitcoin possibly returning to a correction level of $25,000. Though at first glance, such a downshift could seem pessimistic, it does provide a favorable threshold for more investors to enter the asset in preparation for the next bullish cycle that would lead to the predicted price highs.
The Fed Factor
One significant event that could act as a catalyst for market growth is the recent Fed meeting, which resulted in a new 0.25% rate jump. The glaring risks of a recession and a raging banking crisis will be pushing the regulator to loosen the screws of its monetary policy, exerting significant pressure on both the cryptocurrency and stock markets.
Recent statements made by the Fed indicate that the United States has reached a critical level of public debt it can no longer support in light of the weakening global position of the US Dollar. With that in mind, the U.S. can start changing its economic policy, turning significant attention and pinning big hopes on the cryptocurrency market.
Through the Mists
Bitcoin’s price is highly dependent on supply and demand. At present, demand is lagging, since investors are looking for alternatives in commodities for storing value. However, sudden movements made by regulators like the Fed have always resulted in a sharp increase in demand for Bitcoin, as the asset is an untraceable investment instrument.
Another factor that could whip up Bitcoin’s price is the next halving, exactly one year away. With commodities markets in turmoil, BTC mining difficulty set to increase, and the U.S. banking system faltering, Bitcoin could be realistically looking at local maximum values anywhere between its current price of $30,000 and the predicted optimistic highs of $45,000 all the way by the end of the year.
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