Bitcoin, the original cryptocurrency that has served as a blueprint for all that followed it, has been dealing with significant troubles recently as prices stagnate. While in January 2023, values seemed to be going upward, this soon changed in the context of increased regulatory pressures within the market environment. Investors have continued looking towards exchanges such as Binance in order to buy Bitcoin, but their strategies have often been marked by uncertainty.
As such, many are wondering what they can expect from the market both in the short – and the long term. Knowing which direction the market is more likely to develop is vital to protect you and ensure your portfolio remains healthy and stable. And while it’s impossible to predict how the market will expand with complete accuracy, here are some of the things you should have in mind.
Debt ceiling
The debt ceiling has been a cause of debate and apprehension for a while now, and the cryptocurrency market suffered as a result of the uncertainty as well. In the context of increased discourse on the subject, many have wondered if crypto will act as it was intended to and provide investors with protection against chaotic market changes or if it will follow the pattern of traditional finance. Several analysts believe that, given that crypto has been increasingly integrated within conventional markets, it might also deal with challenges, albeit less significant.
Recently, the Bitcoin price has climbed over $28,000 in the context of a deal announced by the White House that aims to avert the potentially disastrous effects of a debt ceiling. The crisis has weighed quite heavily on the price so far, causing it to stoop to $25,000. Finding a plan that would suit the economy was crucial, as a default would likely trigger a recession and mass unemployment.
Now, with a debt deal attached, investors will likely find the market much more trustworthy, meaning they’ll show renewed interest in investing their capital in crypto ventures.
Web3
Web3 technology has been increasingly discussed, and not just for personal use, but also in the context of far-reaching, societal-wide tech developments. Recently, China has released a whitepaper outlining additions and suggestions for the country’s Web3 policy. Recently, Japan has also announced it is moving towards implementing this technology, while Hong Kong is set to release its regulatory framework on June 1st.
In China, Web3 technology refers to an internet network that has been enhanced by blockchain and artificial intelligence, as well as faster and more efficient computing chips. The whitepaper also discussed the improvements to the infrastructure layers, including the interactive terminal, the platform tools and the application. Many were reminded of the classic OSI network layer model, one of the standards since the 80s.
While many investors have declared that they believe China is not far behind Hong Kong when it comes to cryptocurrencies and that they will soon be allowed in the country as well, others remain more skeptical, indicating that digital assets will have to ensure they don’t come into conflict with the policies and regulations placed on cryptocurrencies.
Hong Kong
Another aspect of Hong Kong’s plans for cryptocurrencies is their use within the retail sector. The investors can choose among several digital assets, and the transactions will be conducted solely on licensed platforms and exchanges. The move is part of a broader plan to transform Hong Kong into a cryptocurrency hub and set it as one of the centers for developing cyber currencies and the associated technology.
Legislators believe the changes will make the economy more potent and more diversified. It will allow foreign investors to set up offices in Hong Kong, giving the economy a significant boost. While it is difficult to estimate the exact effect and impact of these changes on long-term capital flow, most are confident that they cannot be negative.
Bear VS Bull
Over the past year, the cryptocurrency market has been under the influence of a bearish tendency. Data has failed to identify when the price will rise significantly, and it will likely take some time until the levels are back to what they were in 2021. During the recent Bitcoin Conference in Miami, the bear market was seen as the scapegoat for record-low attendance. While in 2022, around 35,000 people made up the audience, in 2023, only 15,000 showed up for Bitcoin’s largest gathering.
However, others quickly noticed that a decline in disposable income due to ongoing inflation is also a highly probable culprit. It is just as likely that the general investor prefers to join a conference during a time when Bitcoin is on the rise, as the discussions are likely to be more exciting and engaging. Yet others believe that this time when the price is still on a pendulum, is a stellar opportunity to learn more about how crypto functions and what you can do to improve your list of digital holdings.
Looking towards 2024
It’s never too early to start making estimates, and some investors have already begun discussing the changes that can intervene for the 2024 market. Some analysts believe that while the debt ceiling won’t permanently debilitate cryptocurrencies, it will still cause sufficient chaos that the market will likely take longer to get a considerable price boost.
The US banking crisis and the national debt will likely be too stifling an environment for cryptocurrencies to develop well. As such, it’s unlikely that BTC will achieve the $70,000 mark until 2024. From then on, 2025 and 2026 could provide further opportunities for growth. Some have also expressed the view that, although it might sound counterproductive, the current economic crisis might be good for Bitcoin and increase its traction among investors.
Nonetheless, just because investors can expect good things to come in 2024 doesn’t mean there’ll be no development in 2023. The price of Bitcoin could reach $45,000 by the end of the year, according to some predictions.
While it’s impossible to determine the direction of the market with complete accuracy, there are several indicators you can consider when it comes to developing your portfolio.