The bitcoin (BTC) community is divided on whether the price of the token is going to rise or crash in the next year.. Most analysts and technical indicators suggest that it could bottom out between $12,000 and $16,000 in the coming months. This correlates with a volatile macro environment, stock prices, inflation, Federal Reserve data, and (at least according to Elon Musk) a potential recession that could last into 2024.
Secondly, influencers, BTC maximalists, and a host of other fanatic shills contend its price could skyrocket to $80,000 and beyond.
There is evidence to support both sides. One issue is that they may be looking at different time horizons. There is a strong argument to be made that the price of BTC is likely to fall sharply in the coming months, but could rise in mid to late 2023.
The case for a BTC price surge in 2023
Bitcoin bullish rallies historically coincide with the four-year market cycle, which includes accumulation (buying), an uptrend, distribution (selling), and a downtrend. Usually, we would expect the accumulation part of this process to start in 2023, although some believe it could be delayed until 2024.
Nevertheless, we are likely to see a rise in valuations in mid-2023, and there is evidence to support this idea. According to Kevin Svenson, we could witness a bull market starting around April, when the 80-week bear market ends.
— Kevin Svenson (@KevinSvenson_) October 19, 2022
Average duration of the #Bitcoin bear market
The deflationary nature of bitcoin, through its halving events, also encourages these price increases over time.. (Halvings cause the reward for miners to be cut in half. The next one is scheduled for April 2024). Despite the market turbulence, lThe deflationary nature of bitcoin results in price appreciation for long-term investors..
But you have to be careful with enthusiasm. Influencers and markets are well aware that greed sells. Predictions that Ether (ETH) will rise 10x in price by 2023 should be viewed with skepticism. Also, Bitcoin is highly unlikely to reach $100,000 or even close to it, despite such claims.
Pessimistic estimates say that BTC will fall to $3,500
Other experts indicate that we will not see a rise soon or even in 2023. Gareth Soloway of InTheMoneyStocks indicated that there is a slim chance it could even crash to $3,500:
“There will be a twist in Bitcoin as it matures as regulation helps people feel more confident…I think in the short term we’re going to see a little bit of a bounce and then a drop to $12,000 or $13,000, and then I’m worried about it going below $10,000 or $8,000, maybe even worst case scenario USD 3,500 a very small percentage, but that would be the equivalent of the collapse of Amazon.com in the dot-com era.”
If the price of BTC falls to $12,000 or less, it may not be profitable for miners to manage the ecosystem.a. That would mean transactions would stop processing, a problem that could cripple the industry.
Let us also remember that we have not seen any strong correlation between cryptocurrency prices and mass adoption, which is not a healthy pattern. Crypto prices have been a function of the amount of money — through derivative contracts and other financial instruments — that investors (mainly whales and institutions) throw at certain assets.
Times of change but bullish sentiment
There are still other concerns to address regarding BTC price cycles. Some suggest that these four-year cycles could cease to apply for various reasons.. One of them is that the majority of BTC is not the only actor on the scene, unlike in previous cycles.
It is competing against a number of cryptocurrencies that are superior in most respects, along with decentralized finance (DeFi), GameFi, non-fungible tokens (NFTs), decentralized autonomous organizations (DAOs), Web3 startups, and a host of much more lucrative investment mechanisms. To participate in Web3 and DeFi you need to buy ETH, not BTC. Many assume that as people will “become more interested in DeFi”, the price of BTC will go up. This is unfounded.
However, it remains one of the first coins that institutions will gravitate towards when they get involved and an iconic name in the crypto world. Considering all this, the price of bitcoin is likely to rise in mid-2023, although we will see a drop in the coming months.
On Oct. 18, more than 38,000 BTC worth $750 million was withdrawn from crypto exchanges to private wallets, a sign that whales are hoarding and storing for volatile times. Off-exchange moves are often interpreted as bullish indicators. Robert Kiyosaki, author of “Rich Dad Poor Dad,” is bullish on BTC due to interest from institutions and pension plans. What tweeted on October 7:
“Why buy gold, silver and bitcoin? Bank of England spin means buy more GSBC. When pensions were about to collapse it became clear that Central Banks can’t fix… INFLATION. Hedge funds pensions have always invested in G&S. Pension funds are now investing in bitcoin. They know Fake $, stocks and bonds are fried.”
Why buy gold, silver, Bitcoin? Bank of England pivot means buy more GSBC. When pensions nearly collapsed it exposed Central Banks cannot fix…INFLATION. Pension have always invested in G&S. Pension funds now investing in Bitcoin. They know Fake $, stocks & bonds are toast.
— therealkiyosaki (@theRealKiyosaki) October 7, 2022
An “end of the world” BTC boom?
It Ironic about BTC maximalists is that they have a belief that a crash of existing systems and the US dollar (in particular) would be beneficial to bitcoin and the “decentralized” community in general. They claim that a fall of governments will require a new financial system, and bitcoin is perfectly prepared.
The idea is that there is a clearly inverted line between the collapse of the fiat infrastructure and the increase in the price of BTC., where more volatility equals more price increases. When the world collapses, the decentralized community will simply “fill the void”.
Of course, a collapse in oil/USD would result in a skyrocketing rise in energy prices. That would also mean a potentially unsustainable bitcoin ecosystem due to mining issues.. That’s a problem that Ethereum addressed with its September Merge, which took miners out of the equation and resulted in a 99.99% reduction in its carbon footprint.
And, a complete collapse would also mean dollar valuations are worthless.. If hyperinflation occurs, What would a million dollars in BTC be worth if it couldn’t be used to buy a loaf of bread? Volatility is often a friend of bitcoin, but only up to a point.
Bitcoin maximalists should be careful what they wish for: Fulfilling their wishes could spell disaster for the dollar and drag bitcoin down with it.
Daniel O’Keeffe is a writing and public relations specialist for Web3 who began investing in bitcoin in 2013. He previously worked for three years as a compliance analyst for JP Morgan and State Street. He has an MSc in Computer Science from University College Dublin and a Bachelor of Laws from the University of Limerick.
Clarification: The information and/or opinions expressed in this article do not necessarily represent the views or editorial line of Cointelegraph. The information set forth herein should not be taken as financial advice or investment recommendation. All investment and commercial movement involve risks and it is the responsibility of each person to do their due research before making an investment decision.