Bitcoin breaks above $17,000 for the first time since early December

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Crypto’s benchmark cryptocurrency, Bitcoin, broke above $17,000 for the first time in 2023 after being limited for several weeks between $16,380 and $16,975.

Bitcoin has now been on a positive trend since early January, when it opened the year at $16,482. Bitcoin is up 3.72% in the past seven days and 2.33% in the past 24 hours, according to data from CryptoSlate.

BTC-USDWhy is Bitcoin pumping?

With no significant on-chain developments within the Bitcoin ecosystem, the rally appears disassociated from any network-related news. Additionally, notable developments within the crypto space as a whole that Bitcoin might react to have been rare.

However, as the dust begins to settle on the FTX news cycle, Bitcoin’s use case for self-custody is stronger than ever. A global financial crisis is looming with persistently high inflation, no end in sight to the war in Ukraine and growing tensions between China and the West. Moreover, the concern about which asset class will act as the best store of value in 2023 could strengthen investors’ resolve in Bitcoin.

While Bitcoin has acted as a risk asset for most of 2022, eyes are now on whether Bitcoin will repeat its strong performance when the war in Ukraine began as we move forward into 2023.

Bitcoin’s next halving event is around 18 months away, so historical metrics suggest the bull market is not around the corner just yet. However, many investors fled crypto after the tumultuous events of 2022. The collapse of major exchanges, projects, hedge funds, and lending platforms has rattled many investors while weeding out bad actors from the space.

Forbes recently discussed potential Bitcoin price predictions for 2023 with Alistair Milne, founder of Altana Digital Currency Fund, suggesting it could hit $300,000 by 2024. Others had more conservative estimates predicting price between $30,000 and $50,000, like University of Sussex finance professor Carol Alexander.

Eric Wall, the CIO of Arcane Assets, also said that the bottom has been reached for Bitcoin, and that it will now rush towards a price target of $30,000 in 2023.

Potential bear trap

The biggest elephant in the room, however, is the fate of Digital Currency Group and, therefore, Genesis and the Grayscale Trust. A recent report by CryptoSlatemarket laid out the predicament DCG faces and the potential havoc it could wreak on the crypto industry if it were forced to liquidate assets to avoid bankruptcy.

CryptoSlate is keeping a close eye on developments at DCG as there have been no further updates following Winklevoss Twin’s ultimatum regarding Genesis Earn funds. The Winklevoss brothers set January 8 for the DCG to respond to an open letter, a date that has now passed without a word.

The Forbes article mentioned above also highlighted several mainstream financial firms that forecast Bitcoin to fall below $10,000 this year. Most notably, Eric Robertsen, global head of research for Standard Chartered, called for $5,000 as “firms and crypto exchanges find themselves with insufficient liquidity, leading to further bankruptcies and a collapse in investor confidence. in digital assets”.

Yet, as the chart below shows, the overall crypto market capitalization has been on the rise since 2023. Over the past nine days, more than $50 billion has been pumped into the crypto markets. As we welcomed into the new year, the total market capitalization was $795 billion, but has since grown to $859 billion, according to CoinMarketCap.

The global crypto market capitalization with the removal of Bitcoin stood at $477 billion on January 1. It has steadily increased to $525 billion, an increase of $58 billion. So, while Bitcoin performs well in 2023, the broader crypto market outperforms the flagship crypto network. Only $18 billion was pumped into Bitcoin, a mere 4.7% increase in market capitalization compared to the rest of the total market (minus Bitcoin), which rose 10%.

Global Crypto Market Cap

Nothing has changed when it comes to Bitcoin’s fundamentals, and 2023 should be a year where either the FIAT system solves the inflation problem or the events of 2008 come back to hit central banks harder than ever.

The Fiat problem

A world where the FIAT system is running out of steam is a world where Bitcoin has the potential to reign supreme. Time will tell if the US Federal Reserve, Bank of England, European Central Bank and Bank of Japan can regain economic control.

While Bitcoin held steady before starting to rise in value, the dollar has been falling since late September. The chart below shows that the dollar’s peak strength was reached on September 22, 2022. Since then, it has fallen more than 10%, roughly the same decline seen on the Bitcoin chart for the same period. .

Bitcoin’s volatility was at some of the lowest levels in its history between November and January, moving around 12% in either direction during the period.

Today’s price action in Bitcoin mirrors the poor performance of the dollar over the past 24 hours. Since January 6, DXY has fallen 2.49%, while Bitcoin has risen 2.9%. Of course, none of these moves are unprecedented. However, if the DXY continues to decline throughout 2023, this could give Bitcoin the strength it needs to return to the levels last seen before the bad actors caused a market-wide sell-off in 2022.

DXY

Bitcoin is clearly positioning itself as an escape from FIAT in a world where global currencies are potentially under serious threat. Of course, there are several moving parts, some historically correlated and some not, but 2023 should no doubt be an interesting experiment on Bitcoin’s performance amid global economic uncertainty.

At press time, Bitcoin is ranked #1 by market capitalization and the BTC price is up 2.39% in the past 24 hours. BTC has a market capitalization of $333.95 billion with a 24-hour trading volume of $18.01 billion. Learn more >

BTCUSD Chart by TradingView

Bitcoin On-Chain AnalysisMarket Summary

At press time, the global cryptocurrency market is valued at $855.35 billion with a 24-hour volume of $46.14 billion. Bitcoin dominance is currently 39.05%. Learn more >

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