In the year of 2009, a groundbreaking innovation emerged onto the global stage – Bitcoin. As it made its debut, a dichotomy of sentiments arose among investors – skepticism clashed with passionate belief in the potential of this decentralized cryptocurrency to revolutionize the financial landscape. Indeed, some people have argued that Bitcoin is a Ponzi scheme, while others have argued that it is a threat to national security. Over time, however, Bitcoin proved to be the initiation of a disruptive change in an industry that had remained largely untouched for generations.
Bitcoin indeed, ignited a fire of curiosity and controversy. Some investors scoffed at the idea of a decentralized, digital coin, while others foresaw it as a groundbreaking force that could disrupt the traditional financial industry. As the years rolled on, Bitcoin proved its resilience, shattering initial doubts and accusations of being a mere scam.
Yet, the journey of Bitcoin is far from static; it is an ongoing narrative punctuated by debates on scalability, energy efficiency, and regulatory frameworks. These discussions, far from detracting, actively shape the trajectory of Bitcoin, molding it into a resilient force that refuses to conform.
The passage of time has witnessed governments and financial institutions evolve in their perceptions of Bitcoin. Once met with skepticism, they are now exploring avenues such as central bank digital currencies (CBDCs) influenced by the success and adaptability of cryptocurrencies. What was initially brushed aside has now become the epicenter of financial innovation.
What drives Bitcoin’s price?
- Supply and Demand Dynamics: Bitcoin’s price is fundamentally driven by the principles of supply and demand. When there is a higher demand for Bitcoin than its available supply, its price appreciates. Conversely, if the supply surpasses demand, the price tends to decline.
- Investor Sentiment: The sentiment prevailing among investors plays a pivotal role in shaping Bitcoin’s price. Bullish sentiment(optimistic) prompts increased buying activity, propelling the price upwards. Conversely, bearish sentiment, (pessimistic), triggers selling pressure and price depreciation.
- Fundamental factors: Fundamental factors such as the adoption of Bitcoin by businesses and institutions can also affect its price. For example, if more businesses start accepting Bitcoin as payment, it could lead to an increase in demand and a higher price.
- Technical factors: Technical factors such as Bitcoin’s trading volume and price volatility can also affect its price. For example, if Bitcoin’s trading volume increases, it could lead to more liquidity and a more stable price.
- Regulation: Regulation is another factor that could affect Bitcoin’s price. If governments start to regulate Bitcoin more heavily, it could make it less attractive to investors and lead to a decrease in price.
Some additional factors that can affect Bitcoin’s price:
- Major news events: Major news events, such as the launch of a new Bitcoin exchange or a hack of a Bitcoin exchange, can also affect its price.
- The performance of other cryptocurrencies: The price of Bitcoin is often correlated with the price of other cryptocurrencies. If the price of other cryptocurrencies goes up, it could lead to an increase in the price of Bitcoin.
- The overall state of the economy: The overall state of the economy can also affect the price of Bitcoin. If the economy is doing well, investors may be more willing to invest in Bitcoin, which could lead to an increase in its price. Conversely, if the economy is doing poorly, investors may be less willing to invest in Bitcoin, which could lead to a decrease in its price.
Bitcoin’s price review so far:
The Bitcoin market is currently struggling to reclaim the $30,000 level, and analysts anticipate a prolonged period of unstable accumulation.
In the short term, Bitcoin’s price action in the first half of 2023 has been influenced primarily by short-term investors, with 88% of this group’s supply currently in a profitable position. This suggests a likelihood of short-term investors selling and taking profits.
Long-term investors, on the other hand, have remained strong and have refrained from selling, pointing to a sustained profit regime. However, the profit levels of short-term investors point to a potential risk of further correction.
Despite the current state of the market, there is still hope that the upcoming Bitcoin block reward halving, anticipated for April 2024, will boost the price. This assumption is supported by PlanB’s stock-to-flow (S2F) model, which shows that the price of Bitcoin tends to increase as it becomes more expensive as a result of halving events.
Although the S2F model predicts a potential price increase after the price halving, actual price movements may not exactly match those predictions because of things like market digestion and time delays.
What do analysts say?
- Tom Lee, Managing Partner of Fundstrat Global Advisors: Lee believes that Bitcoin could reach $28,000 by the end of 2023. He bases his prediction on the fact that Bitcoin has historically followed a logarithmic growth curve, and that this trend is likely to continue. He stated, “Bitcoin will rally to $200,000; people underestimate the impact of a spot BTC ETF.”
- Willy Woo, Crypto Analyst: Woo stated that Bitcoin could reach $100,000 by 2024. He argues that Bitcoin is becoming increasingly scarce, and that its price is likely to rise as demand increases.
- PlanB, Crypto Analyst: PlanB is the creator of the Stock-to-Flow model, which predicts that Bitcoin’s price will reach $100,000 by 2024. He bases his prediction on the fact that Bitcoin has historically followed a stock-to-flow ratio, and that this trend is likely to continue.
- Teddy Vallee, CEO of Nullex Capital: Vallee believes that Bitcoin could reach $1 million by 2030. He argues that Bitcoin is a disruptive technology that has the potential to revolutionize the financial system.
Crazy stories about Bitcoin:
In 2010, Laszlo Hanyecz paid 10,000 Bitcoin for two pizzas. Today, those Bitcoin would be worth over $300 million. This story shows how the value of Bitcoin has skyrocketed in a short period of time.
In 2011, a man named Michael Faulk accidentally threw away a hard drive containing 7,500 Bitcoin. At the time, the value of those Bitcoin was worth about $25. Today, they would be worth over $300 million.
In 2013, a man named Stefan Thomas lost the password to a hard drive containing 7,000 Bitcoin. He has tried every password he can think of, but he has not been able to access the Bitcoin. Today, those Bitcoin would be worth over $250 million.
In 2014, a group of hackers stole 120,000 Bitcoin from the Mt. Gox exchange. This was one of the largest cryptocurrency hacks in history. The value of the stolen Bitcoin at the time was about $460 million.
In 2017, a man named Charlie Shrem was sentenced to two years in prison for operating an unlicensed Bitcoin exchange. He was also ordered to pay $924,366 in restitution.
In 2018, a man named Mark Karpeles was sentenced to five years in prison for his role in the Mt. Gox hack. He was also ordered to pay $48.9 million in restitution.
In 2010, my friend bought Bitcoin for a few hundred dollars. He held onto it for a few years, but then he started to doubt whether it was a good investment. He sold it all in 2014, when the price was only a few thousand dollars. Today, those Bitcoin would be worth over a million USD. He regrets selling them, but he is also a cautionary tale for anyone who is thinking about investing in Bitcoin. Bitcoin is a very volatile investment, and it is important to do your research before you invest.
- Limited Supply: Think of Bitcoin like a rare treasure. There will only be 21 million of them ever, making each one more valuable over time, just like a unique collectible.
- Independence: Unlike regular money, Bitcoin isn’t controlled by governments or big banks. This means it’s not easily affected by things like rising prices (inflation) or changes in the economy.
- Profit Opportunity: Trading on CMTrading platform offers a unique opportunity to profit from Bitcoin without actually owning it. Here’s how it works:
- No Ownership Needed: Unlike traditional investments where you need to buy and own assets, trading on CMTrading allows you to speculate on Bitcoin’s price movements without holding the actual cryptocurrency. This means you don’t have to deal with the complexities of owning and securing Bitcoin.
- Leverage: CMTrading offers leverage, which allows you to control a larger position with a relatively small amount of capital. This can amplify your potential profits, but it’s important to note that it also comes with some risk.
“Many traders think that it’s only when they know what would happen in the future that they can make money. So, they make many assumptions about the future, including the belief that what is happening at the moment would persist forever — the trend would continue or the range market would persist. They trade as if the present condition is the default condition of the market.” — Ray Dalio
As Ray Dalio wisely reminds us, the key lies in maintaining an open mind. Instead of trying to predict the future with unwavering certainty, we should observe the market, adapt to changing conditions, and take calculated risks. It’s these calculated risks that pave the way for a more promising financial future.
In the ever-evolving world of trading, flexibility and adaptability are the true assets. By staying open-minded and responsive to market shifts, we position ourselves for greater financial success in the long run.”
CMTrading is a regulated South African online trading broker that offers a diverse range of financial products and services. It specializes in granting access to trading in various markets, including forex, commodities, indices, and cryptocurrencies. CMTrading aims to provide a user-friendly trading experience by offering both beginner-friendly features and advanced trading tools for experienced traders. With a focus on customer support and education, CMTrading provides resources such as webinars, tutorials, and personalized assistance to help traders make informed decisions.
Your Voyage Begins Now
Embark on this remarkable journey with us. CMTrading’s Introducing Business (IB) program is more than a partnership; it’s a gateway to financial empowerment. It’s time to sculpt your destiny, one referral at a time. Becoming an IB is an easy and exciting way to earn money – simply refer traders to CMTrading and let us do all the work! In return for referring clients to CMTrading, our IBs will receive a favorable commission. So go ahead, start referring clients, and earn money when they trade. It’s that simple!
Seize the opportunity