After a hard year of downs and plummets, Bitcoin is finally witnessing a bullish momentum. The bear market experienced in 2022 was a significant low for the cryptocurrency market after the continuous disasters and scams circulating the crypto industry, as well as the pullback in the broader market linked to central bank actions. Some even claimed that the FTX collapse has set back crypto by years. However, it seems like Bitcoin began 2023 on a positive note. On March 19, Bitcoin’s price pumped to surpass %28,000, a new recorded value after a series of drops since June 2022.
Last week, Bitcoin gained over 37% against the U.S. dollar as well as Bitcoin’s market capitalization added $194 billion in 2023. Is this the smell of the new bull run?
The potential fallout of the global banking system, the Federal Reserve’s move to quantitative easing, and the purchases by large whales are catalysts in Bitcoin price’s soaring heights. Not to forget Bitcoin’s 4-year cycle as the upcoming halving is expected to be in 2024.
Let’s take a look at the reasons behind the Bitcoin pump.
Bitcoin Pumps Amidst Banking Crisis
The Bitcoin pump we are witnessing might signal different outcomes for the path cryptocurrency is taking. We should note that a surge in the price doesn’t ultimately mean that the bull market is ahead of us. The crypto market is very volatile and it correlates with the volatility of the macroeconomic environment such as stock prices, inflation, the Federal Reserve, and the economic recession.
However, amidst the Silicon Valley bank crash and the closing of Signature bank, the crypto prices are still rallying up to an ATH of 28,000, which is a level not seen since June 2021.
Federal Reserve Minor Rate Hikes
The banking crisis has definitely put doubt on the United States Federal Reserve’s ability to keep raising interest hikes. However, the Fed is caught up in different decisions. Raising rates would keep inflation stable but will further increase banking failures.
The Fed ended up deciding on a minor 25 basis points (bps) rate than a 75 bps hike amid the cooling inflation. The expected decision was to be a harsh 75 bps, and so, the crypto community welcomed the minor rate in a positive way.
The Commencement of Quantitative Easing
The United States Federal Reserve has pumped $300 billion into the economy in an aftermath of the ongoing banking crisis. This marks the end of quantitative tightening and the return to quantitative easing. This policy was previously conducted during the global financial crisis witnessed in 2008 and during the COVID-19 market crash.
Now, the QE policy is being implemented by the Fed in response to the Silicon Valley Bank collapse and the closing of Signature Bank, and as more banks face the risk of failure.
Historically, Bitcoin’s value pumped from $4000 to approximately $70,000 in the years the Fed injected the economy with M2 supply before the quantitative tightening began. Therefore, the era of QE will mark more liquidity pumped into the global economy. Which will certainly benefit the crypto market.
If Bitcoin keeps its exponential moving average it would be a breakout from the macro downtrend and would signal a new bull run with November 2022 being the bottom low.
#FireCharts shows $30M in #BTC bid liquidity consolidated and moved down to defend the 200-Week MA. This is a KEY LEVEL for bulls looking for full candle bodies above the 200 WMA to call it a bull breakout. If the W candle closes below it, hope of a confirmation next week is lost pic.twitter.com/0doqQWchTQ
— Material Indicators (@MI_Algos) March 19, 2023
A Bullish Trend?
Analyst and podcast host Scott Melker, known on Twitter as “The Wolf of Wall Street” proclaimed in a tweet that “The bear market is officially over”. He continued to discuss that the new value of Bitcoin confirms a bullish trend. If prices go low from there, it would be a new trend and not part of the previous bear market.
Trader and analyst Rekt Capital was also vocal about Bitcoin’s macro downtrend and believes that it will occur a “bullish engulfing” event due based on quarterly timeframes.
Very strong #BTC reaction from the Range Low of the macro range
BTC is back at the higher regions in the range$BTC #Crypto #Bitcoin pic.twitter.com/eJeo5FIEDM
— Rekt Capital (@rektcapital) March 13, 2023
Trader Tardigrade described on Twitter Bitcoin’s performance as “retracements before takeoff”.
#Bitcoin retracement before take off.#BTC #Crypto pic.twitter.com/QKWSeVswS5
— Trader Tardigrade (@TATrader_Alan) March 11, 2023
The Long Awaited Bitcoin Halving
The Bitcoin halving is the event that often leads to excitement for crypto investors. That’s because, during the Bitcoin halving, Bitcoin rewards to miners are cut in half. The next halving event is scheduled to be next year in 2024. Thus, this could also signal the beginning of a new cycle with Bitcoin. As it normally does around 15 to 18 months before halving.
Bitcoin halving thus counteracts inflation and keeps the amount of Bitcoin in circulation at a constant rate.
Mixed Predictions: Bear or Bull?
So, what’s the verdict? Is Bitcoin witnessing the beginning of a bull run? Or is it just another hype that will ultimately spiral downward? The Crypto Fear & Greed Index showcases the normalized sentiment score for crypto hitting 66/100, meaning that crypto now is in its greed zone, a zone not witnessed since November 2021.
Many investors and members of the crypto community have great predictions on the Bitcoin price, with some predicting that it will surge back to $45,000. Alistair Milne, the founder of Altana Digital Currency Fund, predicts that crypto prices will have a massive surge to $300,000 by the end of next year. Saying that “this was no time to be bearish”.
🐂 Crowd bullishness is doubling up bearishness for crypto's top 2 assets. $BTC $ETH https://t.co/O34MM32Kgn pic.twitter.com/Vn3Ne9B0ED
— Santiment (@santimentfeed) March 20, 2023
However, not everyone is bullish on Bitcoin. Dr. Michael Burry stated that “We are likely to see CPI lower, possibly negative in 2H 2023, and the US in recession by any definition. Fed will cut and the government will stimulate. And we will have another inflation spike”. In addition, Consumer bank Standard Chartered’s prediction is that Bitcoin will go low as $5000.
Again, we can never really predict how Bitcoin will behave. The market is extremely volatile and investment based on speculations or rumors might not be the most clever idea. Before jumping on the hype of the Bitcoin pump, we advise that you do your own research before betting on the crypto market.