After a tumultuous 2022, cryptocurrency investors are trying to figure out when the next rally for bitcoin could be.
Last week, at a cryptocurrency conference in St. Moritz, Switzerland, CNBC spoke to industry insiders who paint a picture of 2023 as a year of caution. bitcoin It is expected to trade within a range, be sensitive to the macroeconomic situation such as rising interest rates and remain volatile. A new run-up is unlikely in 2023.
However, experts look to the next year and beyond with optimism.
In 2022, the entire cryptocurrency market has lost about $1.4 trillion in value with the industry facing liquidity issues and bankruptcies topped by the collapse of the FTX exchange. The infection has spread throughout the industry.
While bitcoin did get a small bump at the start of the year, in line with risky assets like stocks, experts say it is unlikely that bitcoin will retest its all-time high below $69,000, but it may have reached a level. bottom.
“I think there is a little bit more downside, but I don’t think there will be much,” Bill Taye, a venture capitalist and cryptocurrency veteran told CNBC last week.
“There is an opportunity for that [bitcoin] Kind of bottomed out here,” adding that it could drop to $12,000 before jumping back in.
Bitcoin is likely to be range bound at the lower end between $15,000 and $20,000 and at the higher end between $25,000 to $30,000, said Meltem Demirors, chief strategy officer at CoinShares.
Much of the “forced selling” that happened in 2022 as a result of the market crashes is now gone, she said, but there is not a lot of new money coming into bitcoin.
“I don’t think there’s a lot of forced selling left, which is optimistic,” Demirors told CNBC on Friday. “But again, I think the upside is very limited, because we also don’t see a lot of new flows coming in.”
Investors also monitor the state of the overall economy. Bitcoin has proven to be closely associated with risk assets such as stocks and, in particular, heavy technology Nasdaq. These assets are affected by changes in interest rates from the Federal Reserve and other macroeconomic movements. Last year, the Federal Reserve embarked on a path of aggressively raising interest rates to try and tame inflation, which has hurt risk assets along with bitcoin.
Industry insiders said that a change in the macro situation could help Bitcoin.
“There may be catalysts that we’re not aware of, again, the macro situation and the political environment is a little bit uncertain, and inflation continues to rise, and I think it’s something new. We haven’t seen that, you know, in 30 or 40 years,” Demirors said. .
“So who knows, as people look to make allocations in the new year where crypto fits into that wallet?”
The timing of the next bitcoin rally
In interviews with CNBC, many industry participants talked about Bitcoin’s historical cycles, which occur roughly every four years. Typically, bitcoin will reach an all-time high, and then correct significantly. There will be a bad year and then a year of moderate recovery.
Then the “halving” will happen. This happens when miners, who run specialized machines for efficient transaction verification on bitcoin networks, see their rewards for mining cut in half. Miners get bitcoin as a reward for validating transactions. The halving, which happens every four years, is effectively slowing the supply of bitcoin in the market. There will only be 21 million bitcoins in circulation.
The process of halving is usually preceded by the running of the bull. The next halving event will take place in 2024.
Scaramucci called 2023 the “year of recovery” for bitcoin and predicted it could trade from $50,000 to $100,000 within two to three years.
“You take risks but you also believe [bitcoin] adoption. So if we get the adoption right, which I think we will, this could easily be fifty to one hundred thousand dollars in assets over the next two to three years,” Scaramucci said.
Meanwhile, Tai said the onset of the climb is “likely in a year,” saying the after-effects of the FTX crash could continue to be felt for another six to nine months.
Jean Baptiste Graftieaux, global CEO of cryptocurrency exchange Bitstamp, told CNBC last week that the next bull run could come over the next couple of years, citing the growing interest from institutional investors.
However, Demirors warned that the events during 2022 had “caused enormous damage to the reputation of the industry and the asset class,” adding that “it will take some time for that confidence to return.”