The last two years have been challenging for Bitcoin investors. Most news from the cryptocurrency world has been associated with fraud, crashes, and personalities like Sam Bankman-Fried. The concept of NFTs faced difficulties, and the metaverse became just a trendy expression, while artificial intelligence attracted public attention.
The last two years have been challenging for Bitcoin investors. Most news from the cryptocurrency world has been associated with fraud, crashes, and personalities like Sam Bankman-Fried. The concept of NFTs faced difficulties, and the metaverse became just a trendy expression, while artificial intelligence attracted public attention.
However, quietly and without much fanfare, Bitcoin seemed to be experiencing a revival.
"In terms of price, 2023 was exceptional for Bitcoin," noted investor Meltem Demirors from Fast Company after the cryptocurrency's price exceeded $45,000 for the first time since April 2022.
Many view the "crypto winter" as a means of purifying the system.
"We faced tremendous pressure, and we reached the bottom," says Peter McCormack, host of the "What Bitcoin Did" podcast, noting the negative sentiment towards the cryptocurrency market, fueled by FTX. "But we managed to clean up all that dirt."
Since the beginning of 2023, Bitcoin has grown by more than 160%.
"We are in the early stages of a bull market," noted Cory Klippsten, CEO of Swan, a media and investment company specializing in Bitcoin. He is so confident in the upcoming period of growth and the influx of new investors that he increased Swan's monthly advertising budget from $30,000 to over $1 million and expanded his team from 90 to 150 people.
While everything may seem confusing from the outside, with price growth and bearish news, investors feel confusion and skepticism.
"This is the most hated moment," says Demirors. "Investors are tired of hearing about Bitcoin. They are tired of watching Bitcoin. Because many did not expect such rapid price growth, now everyone hates this rally."
However, supporters of the first cryptocurrency point to specific catalysts for bullish growth.
"ETF is close," says Isaiah Jackson, educator and author of the book "Bitcoin and Black America." In addition, the "halving" plays an almost mystical role in the crypto space, with rewards for miners halving every four years, contributing to maintaining a limited supply of the cryptocurrency.
"We know how market cycles are related to halving," says Jason Williams, author of the book "Bitcoin: Hard Money You Can't F*ck With," pointing to the accompanying price growth.
These are surface reasons, but there are deeper ones. Bitcoin critics claim it is a Ponzi scheme, where price growth is driven only by new investors buying in, and sooner or later, the pyramid will collapse.
McCormack agrees that there is a Ponzi scheme element in cryptocurrencies but claims it is not the only explanation.
"Only the interest on the U.S. debt is close to a trillion a year," he says, assuming that the U.S. government will continue to "print money" (in the form of additional debt) to support the fragile financial system from collapsing, which, in his opinion, will only worsen the problem. He expects the U.S. to continue down this path until the system collapses and sees Bitcoin as the best means of protection.
Jackson, author of "Bitcoin and Black America," remains optimistic about the first cryptocurrency, particularly due to his pessimism about the U.S. dollar.
"I think we're already in a recession; they just haven't told everyone about it yet," says Jackson. Despite many indicators of the U.S. economy looking good (such as historically low unemployment), he believes the real impact of inflation and decreased demand for goods can be seen in grocery stores. Jackson believes that during a recession, Bitcoin will demonstrate its true strength as an alternative store of value, separated from mainstream financial flows.
Klippsten uses a dollar-cost averaging strategy to buy bitcoins daily, regardless of price, accumulating crypto assets even during the "crypto winter." Most investors in the first cryptocurrency use some version of this strategy, buying cryptocurrency at the first opportunity.
Recent months of bearish markets have taught participants several lessons. While long-term holders of bitcoins remained unharmed (if they did not sell), others turned to exotic financial instruments to earn additional profits. Investors made bets on bitcoins on exchanges like Celsius and Voyager to earn interest. However, both companies went bankrupt and lost millions.
"Every time I tried to be smart, I messed up and did stupid things," says Demirors. Now he is more cautious about "dubious exchanges" promising significant passive income from placing bitcoins.
Where will this lead?
"Predicting prices is stupid, really stupid," says Williams, but adds that he will be "extremely disappointed if Bitcoin does not reach a six-figure number" in the current cycle.
McCormack also acknowledges the contradiction of forecasts but emphasizes: "I don't think Bitcoin will fall below $20,000 again, and I won't be surprised if the price stays between $150,000 and $500,000."
On the other hand, Klippsten considers "anything below $350,000" by the end of 2025 to be "reasonable."
However, no one really knows where this process is going and why the price is what it is today. So, an interesting year awaits us with many unknowns, but all analyst forecasts point to a serious rise for the first cryptocurrency.