Bitcoin: US inflation, debt crisis and more could threaten BTC in 2023

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Bitcoin is in the accumulation zone according to the BTC pricing model. Demand for BTC is seeing a revival as hopes for a recovery blossom.

Bitcoin [BTC] investors are regaining hope for a long-term recovery. As such, it is important to juxtapose these expectations with the economic outlook. This could perhaps help assess whether it indeed makes sense to expect a major rally in 2023 and 2024.

How many Bitcoins can you get for $1?

Before we get to debt and inflation issues, we must first consider why long-term bullish expectations are gaining traction. The Bitcoin pricing model revealed that Bitcoin has been trading below its realized price since September 2022. This is significant because, according to BTC’s past performance, a price drop below the realized price signaled the end of the bearish cycle.

Source: Glassnode

If the same expectation is true, then Bitcoin is currently at or near the lower range. This is the same range where accumulation is bound to take place. This is further reinforced by the MVRV ratio, which is always below one, meaning it is always oversold.

Can Bitcoin thrive in an economic downturn?

The biggest lesson of 2022 for the crypto market was that economic factors have a big influence on Bitcoin performance. Will history repeat itself if the United States cannot fight inflation? According to economic analyst Sean Foo, the government borrowed money to fight inflation.

The fight against inflation can lead to additional indebtedness and discourage lenders. Such an outcome could lead to higher inflation and a plunge into economic recession. But what will be the impact on Bitcoin? It all depends on the state of the dollar.

As more countries threaten to abandon the dollar as the world’s reserve, one likely outcome would be a shift in favor of hard money. Gold is currently the preference, but perhaps gold could find favor with the masses in such a scenario.

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The State of Bitcoin Accumulation

An analysis of the supply of Bitcoins in profit revealed that more traders were in profit since the beginning of January 2023. Around 11.2 million BTC are in profit, which means that it is an amount which is already in private addresses. Around 7.66 million BTC was at a loss at the time of publication.

Source: Glassnode

The amount of loss has decreased significantly over the past 10 days, implying that a large amount had been accumulated since the beginning of the month. This confirmed that many BTC investors were optimistic about the prospects for a rally in 2023. But nothing is cast in stone, and things won’t necessarily go as planned, especially now that there are fewer liquidity in the market.

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