Can Bitcoin Reverse Downtrend When Crypto Winter Bites? Photo: In Green / Shutterstock
Since its all-time high in November 2021 Bitcoin (Bitcoin), the largest cryptocurrency in the world, has lost over 70% of its value in line with the broad cryptocurrency markets. The harsh crypto winter was prompted by rising inflation, risk aversion amid recession fears, and the crash of stablecoin TerraUSD (UST).
Will the Cryptocurrency Pioneer Ever Reappear? We take a look at the key factors driving the BTC/USD forecast in 2023 and beyond.
What is BTC/USD?
BTC/USD is the exchange rate of Bitcoin against the US currency. BTC to USD measures how many USD it takes to buy one bitcoin.
Bitcoin, the first decentralized digital currency, was created in 2009 and functions as a peer-to-peer payment system. It does not use central authorities or banks to manage transactions, which are instead organized “collectively through the network”.
The cryptocurrency was invented by an anonymous person or group of people using the pseudonym Satoshi Nakamoto. Since then, it has established itself as one of the most popular digital assets. The very first BTC token, known as the Genesis block, was mined in January 2009.
Bitcoin’s blockchain uses a Proof-of-Work (PoW) consensus mechanism, secured by miners verifying BTC transactions in exchange for a BTC reward. The process is known as crypto mining.
These rewards are halved after every 210,000 blocks are mined, or roughly every four years, in halving events, reducing the amount of total BTC coins in circulation and increasing the price of the cryptocurrency by reducing supply.
The last halving took place on May 11, 2021, when Bitcoin’s block reward was reduced to 6.25 BTC. The next halving event is expected to occur in 2024.
Bitcoin is used not only as a “peer-to-peer version of electronic cash” but also as a store of value. Bitcoin has a maximum supply of 21 million tokens.
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BTC/USD price history
Since its inception in 2009, it has taken BTC to USD over $1,000 for around eight years. 2017 saw the cryptocurrency run well, surging 1,600% in a year from $1,044.4 in early January 2017 to $17,760.3 by December 20, 2017 – an all-time high at the time.
However, a sharp sell-off in early 2018 disrupted, sending bitcoin price down to $7,637.86 by February 8, 2018. BTC continued to decline, dropping to $3,000 by December 10, 2018.
The cryptocurrency peaked again in early July 2019, briefly surpassing $12,000 before losing over 58% of its value, falling to $5,000 by March 13, 2020.
In 2021, the cryptocurrency experienced another bull run, the largest in its history. As of January 8, 2021, the token was valued at around $39,000. On April 16, 2021, Bitcoin hit its first high at $63,258.51 – an increase of around 62%. The price of BTC continued to rise and hit the all-time high of $67,549.74 on November 9, 2021.
In 2022, the coin endured one of its harshest crypto winters yet, shedding nearly 72% from the November 2021 highs and currently (October 12) trading at $19,000.
What is shaping the BTC/USD forecast?
The cryptocurrency market was impacted in 2022 by a number of factors such as the war in Ukraine, the collapse of the stablecoin TerraUSD (UST) and rising inflation. Castle Funds President and Chief Investment Officer Peter Eberle told Capital.com:
“The first half of 2022 was terrible for the stock, bond and crypto markets. A confluence of macro factors such as Russia’s invasion of Ukraine, US policymakers’ slow realization that inflation was real, then the aggressive move to higher interest rates, supply chain issues stemming from China’s Covid policies led to a sharp sell-off across markets. ”
Eberle added that Terra’s “meltdown,” which led to the subsequent fall of sister cryptocurrency LUNA, “caused cascading liquidations across multiple platforms,” impacting not only BTC/USD price but also several hedge funds, including Three Arrow Capital and Celsius affected network.
On June 9, bitcoin briefly traded above $31,000, but this soon turned into a selloff, with the cryptocurrency shedding over 90% of its modest gains, falling to $19,000 10 days later. Since then, BTC has fluctuated, trading between $23,000 and $19,000.
“At the end of the second quarter, many in the industry were waiting for the proverbial ‘next shoe to fall’, but fortunately the situation has calmed down,” says Eberle.
Anndy Lian, chief digital advisor at the Mongolian Productivity Organization and author of NFT: From Zero to Hero, said that the price of bitcoin has been driven by the outcome of Federal Reserve (Fed) meetings and monetary tightening decisions, as well as the latest inflation figures such as the Producer Price Index (PPI) and the Consumer Price Index (CPI).
“But I’m not pessimistic. The mining companies have come through tough times. Despite the high hash rate, the price of bitcoin has not increased significantly. This signals that miners are not piling up the network to make big profits from bitcoin, they are confident that the mining business will do well now that the network has proven its staying power.”
Historically, October has been a good month for cryptocurrencies, with Bitcoin’s October price change averaging 14.6% since 2011, according to Capital.com’s seasonal analysis. But this year is proving to be different. Eberle of Castle Fund noted:
“The third quarter of 2022 showed consolidation in the crypto market as stocks and bonds continue to tumble. The Dow Jones Industrial Average fell 6.2%, Bitcoin fell 2% but saw much lower volatility, and the broader crypto market cap rose 8.5%.”
Bitcoin’s predictions against the US dollar are currently focused on macro events, Eberle added, most notably the Fed’s interest rate decisions, future outcomes of the Russia-Ukraine conflict and the US midterm elections, which are set to take place on November 8th. Additionally, Eberle added a historical outlook on Bitcoin’s past halving events:
“In 2015, BTC bottomed 547 days before the halving and in 2018 it’s 517 days before. The next halving is expected to occur in April or May 2024. So if history repeats itself, we should be getting closer to the start of the next bull market.”
BTC/USD Prediction 2022 and Beyond
Despite the recent downward price move, algorithm-based forecasting service Wallet Investor issued a bullish BTC/USD forecast at the time of writing (October 12). The site noted that BTC is “a very good long-term investment.”
Based on its analysis of past price action, WalletInvestor predicted that BTC/USD could trade at $25,373.90 in 2023 and rally to $47,496.74 in 2027.
DigitalCoinPrice supported the positive BTC/USD forecast, but recorded a faster pace of growth in the following years, expecting the cryptocurrency to reach $24,206.47 by the end of 2022 and $43,340.43 by the end of 2023.
The BTC/USD forecast for 2025 showed that the cryptocurrency would reach $77,238.07 on average and $94,929.40 in 2027. The platform’s long-term BTC/USD forecast for 2030 expected the cryptocurrency to rise to an average of $266,189.92.
Lian shared the optimistic sentiment regarding the BTC to USD forecast:
“Bitcoin price is hovering around $19,400, up 1.9% over the last week. When zoomed out, it gained 1% in value over the last 30 days. If we don’t see the S&P 500 drop to 3200, Bitcoin can drop below the $13,000 region, otherwise I think it will continue to trade sideways for the next few weeks.”
However, Lian noted that one positive aspect to note is that Bitcoin’s hash rate continues to increase.
Note that BTC/USD predictions can be wrong. Analyst and algorithm predictions should not be used as a substitute for your own research.
Always do your own due diligence on the stock before trading, checking out the latest news, a wide array of analyst commentary, and technical and fundamental analysis. Note that past performance is no guarantee of future returns. And never trade with money you cannot afford to lose.
frequently asked Questions
Why has BTC/USD fallen?
Analysts say that macroeconomic factors like the war in Ukraine, rising inflation and the crash of stablecoin TerraUSD have weighed on BTC/USD price. The coin was also heavily impacted by the global monetary tightening.
Will BTC/USD rise or fall?
At the time of writing (October 12), algorithm-based firm Wallet Investor predicted that BTC price could reach $25,373.90 in 2023 and $47,496.74 in 2027. DigitalCoinPrice also issued a bullish BTC to USD forecast, predicting that the coin could reach $24,206.47 by the end of 2022 and $94,929.40 in 2027. Note that their predictions may be wrong. You should always do your own due diligence before trading. And never trade with money you cannot afford to lose.
When is the best time to trade BTC/USD?
Cryptocurrency markets are open 24/7, which means you can trade BTC/USD any time of the day. Looking at price charts and following the latest news and updates to do your own market analysis could help you figure out what time is best for you.
Is BTC/USD a Buy, Sell or Hold?
Your BTC/USD trading strategy should depend on your personal circumstances, risk tolerance and portfolio composition. You should do your own research to develop an informed view of the market. View the latest market trends, news, technical and fundamental analysis and expert opinion before making investment decisions. Remember that past performance is no guarantee of future returns. And never invest money that you cannot afford to lose.
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