After a tumultuous 2022, crypto investors are trying to figure out when bitcoin’s next bull run might take place.
Last week, at a crypto conference in St. Moritz, Switzerland, CNBC spoke with industry insiders who painted a picture of 2023 as a year of caution. Bitcoin should trade in a range, be sensitive to macroeconomic conditions such as rising interest rates and remain volatile. A new bull run is unlikely in 2023.
However, experts look to next year and beyond with optimism.
In 2022, the entire cryptocurrency market lost around $1.4 trillion in value with the industry facing liquidity problems and bankruptcies surmounted by FTX exchange collapse. The contagion has spread through the industry.
While bitcoin saw a small bump at the start of the year, in line with risky assets like stocks, experts say bitcoin is unlikely to retest its all-time high of just under $69,000, but it may have bottomed out.
“I think there are a little more downsides, but I don’t think there will be a lot,” Bill Tai, a venture capitalist and crypto veteran, told CNBC last week. .
“There is a chance that [bitcoin] kind of hit bottom here,” adding that it could fall as low as $12,000 before rising again.
Meltem Demirors, chief strategy officer at CoinShares, said bitcoin is likely to trade in the lower range between $15,000 and $20,000 and in the upper range between $25,000 and $30,000.
She said much of the “forced selling” that happened in 2022 following the market crash is now over, but there’s not a lot of new money coming in. the bitcoin.
“I don’t think there’s a lot of forced sales left, which is optimistic,” Demirors told CNBC on Friday. “But again, I think the upside is pretty limited, because we’re not seeing a lot of new inflows either.”
Investors are also keeping an eye on the macroeconomic situation. Bitcoin has been found to be highly correlated with risky assets such as stocks, and especially technology-heavy assets. Nasdaq. These assets are affected by changes in Federal Reserve interest rates and other macroeconomic movements. Last year, the Fed embarked on a aggressive interest rate hike path to try to control inflation, which has hurt risky assets with bitcoin.
Industry insiders said a change in the macro situation could help bitcoin.
“There could be catalysts that we’re not aware of, again the macroeconomic situation and the political environment is quite uncertain, inflation continues to be quite high, I think that’s a new thing. We haven’t seen that, you know, in 30, 40 years,” Demirors said.
“So who knows, as people look to make allocations for the new year where crypto will fit into this portfolio?”
In CNBC interviews, several industry participants spoke about bitcoin’s historical cycles, which occur approximately every four years. Typically, bitcoin will hit an all-time high and then undergo a massive correction. There will be a bad year, then a year of moderate recovery.
Then the “halving” will happen. This is when miners, who use specialized machines to efficiently validate transactions on bitcoin networks, see their rewards for mining cut in half. Miners receive bitcoins as a reward for validating transactions. The reduce by half, which occurs every four years, effectively slows the supply of bitcoins to the market. There will only ever be 21 million bitcoins in circulation.
The halving usually precedes a bull run. The next halving event will take place in 2024.
Scaramucci called 2023 a “year of recovery” for bitcoin and predicted that it could trade between $50,000 and $100,000 in two to three years.
“You take risks but you also believe in [bitcoin] adoption. So if we get the right adoption, and I think we will, it could easily be an asset of fifty to a hundred thousand dollars over the next two to three years,” Scaramucci said.
Tai meanwhile said the start of a bull run is “probably a year away,” saying the aftereffects of FTX’s collapse could continue to be felt for another six to nine months.
Jean Baptiste Graftieaux, global CEO of cryptocurrency exchange Bitstamp, told CNBC last week that the next bull run could be in the next two years, citing growing interest from institutional investors.
However, Demirors warned that the events of 2022 “have caused enormous damage to the reputation of the industry and the asset class”, adding that “it will take some time for that confidence to return”.