Is Bitcoin On The Rise Again?
Since November 7, 2022, Bitcoin, the leading cryptocurrency, hasn’t shown any signs of recovery. On Thursday, January 14, 2023, the cryptocurrency, which had been trading below $17,000 since the FTX issue, surpassed $21,000.
Although this is a far cry from the $68,000 price the cryptocurrency fell to, traders, investors, and enthusiasts were happy to see the coming ray of sunshine.
The total value of the cryptocurrency market increased by about 19% from $831M in November 2022 to $990M.
Green strokes on the cryptocurrency chart might be a signal to invest and make a profit. However, it’s important to comprehend why the market is expanding and whether it is sustainable. Because US economic metrics were better than anticipated, bitcoin is now more popular. For instance, the decrease in inflation from 7.10% to 6.5% encouraged traders to expect a decline in interest rates.
Bitcoin was once a means of protecting against inflation, but that wasn’t the case in 2022. Similar to how the stock market responds to micro and macroeconomic factors, cryptocurrencies act similarly.
What Is Contributing To The Rise
The increase has also been attributed to whale activity. These are individuals or entities that buy a large enough quantity of cryptocurrencies to move the market.
The increasing mining difficulty is causing the price of bitcoin to rise. According to BTC.com, the mining difficulty has reached 37.6T, meaning it takes 37.6T tries to find a valid Bitcoin block and add it to the blockchain.
While some economic factors are working in bitcoin’s favor, this does not guarantee that things will remain the same. The economic situation in the United States does not affect the macroeconomic conditions that will affect cryptocurrency in the long run.
The global economy will grow by 1.7% in 2023, indicating slow growth. Based on what happened in 2022, this figure may be lower than the World Bank predicted.