even if Bitcoin (CRYPTO: BTC) could rise by as much as 70% for the year, slowing down as investors readjust their expectations for the coming year. Bitcoin’s current price of $28,000 – a level reached in mid-March for the first time in nine months – is more difficult to break than analysts thought.
This price level can provide an interesting trading opportunity for Bitcoin. There are two main contenders to consider that could send Bitcoin soaring by the end of the year. Here’s a closer look at why the second quarter of 2023 could be a defining moment for Bitcoin going forward.
Macroeconomic theory
The main factor influencing the price of Bitcoin right now is the macroeconomic outlook for the US economy. As a result, all eyes are on the Federal Reserve now. Rate hikes are bad for crypto, so Fed rate hikes have kept a ceiling on the price of Bitcoin. Every time the market thinks the Fed is done with tightening, it chooses to raise rates again, and that’s why Bitcoin can’t be released.
Image source: Getty Images.
It is the main reason for the period between now and summer. If you believe that the Fed rate hike is well behind us, it will be a very bullish sign for Bitcoin. Currently, Bitcoin bulls are predicting that this crypto can reach $100,000 if the Fed announces the end of its hike.
Half of Bitcoin
The second major motivation for Bitcoin is the upcoming halving, currently scheduled for April 2024. The halving is an event that happens every four years and has crypto mining fees. for Bitcoin miners cut in half. Currently, Bitcoin miners receive a reward of 6.25 BTC for each block on the blockchain that they win. After the next halving is done, that fee will be cut to 3.125 BTC.
While this halving may seem like a lot of crypto mumbo jumbo, it’s actually Bitcoin. Each halving event increases the amount of Bitcoin, which has a lifetime limit of 21 million dollars. Each halving event makes Bitcoin more deflationary over time.
Both of these are viewed by the market as very good. As a result, recent Bitcoin halving events have been associated with significant price appreciation. Also, this price is seen as normal.
According to a model by the crypto hedge fund Pantera Capital, for example, these prices are often seen 477 days before the actual halving event, at which time Bitcoin will go ballistic. Remembering that past performance is not a guarantee of future performance, this suggests that Bitcoin will continue to gain value in April, which is a bullish month for Bitcoin. By summer, this trend should be visible to Bitcoin investors.
Risk factors
Of course, Bitcoin’s path to breakout performance is not clear. Many analysts are calling for a Bitcoin overhaul. They say that Bitcoin has risen too high, too fast, this year, and a break is coming sooner rather than later. And Bitcoin perma-bear Peter Schiff once again believes that Bitcoin is going to zero.
Also, if the global banking crisis escalates, all bets are off the table. In early 2023, Bitcoin became a “safe haven” for investors seeking refuge from the hidden dangers of the traditional banking system. But there is no guarantee that this “safe” article will continue. Apparently, if things go wrong, people will go back to putting their money in the safe asset: gold.
Should You Buy Bitcoin?
At the moment, however, there are just too many things pointing to the interest of Bitcoin that cannot be ignored. As a long-term investor, I am excited about Bitcoin’s future growth. As Cathie Wood of Ark Invest points out in her analysis, Bitcoin has become an important part of the global financial system. This is a trend that will likely continue.
I believe that the global macroeconomic situation will improve in the middle of 2024, thanks to the actions of the Federal Reserve. And, for a little cherry on top, Bitcoin is now only a year away from its next halving.
When you add all this up, Bitcoin is my top cryptocurrency to buy before the summer.
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Dominic Basulto has a position on Bitcoin. The Motley Fool has a position and recommends Bitcoin. The Motley Fool has an advertising policy.
The views and opinions expressed herein are those of the author and do not necessarily reflect those of Nasdaq, Inc.