After a year of doom and gloom, whose sinking last quarter surely caused the last of the crypto-tourists to retreat in disbelief, January 2023 ushered in a sharp turnaround. This change in mood was prompted by an exceptionally strong performance from Bitcoin, which recovered almost 40% of its price in the opening month and was hailed by Goldman Sachs as the best performing asset in the world. year so far.
That’s good news, but there are still eleven months of 2023 to go carefully, so here, at the start of the second month, is it time to declare with certainty that the worst is really behind us, and we are in a new section distinct from Bitcoin travel?
Crypto has a habit of cutting the rug under those who make the boldest near-term claims, so there’s understandable trepidation even (or especially) among the most seasoned forecasters, but it’s still just to observe. that the indications are leaning towards the bottom of the bear market receding in the rearview mirror.
bitcoin patterns unfold
The first thing to note is that we are now approaching fifteen months since Bitcoin’s all-time high of just under $70,000, recorded in November 2021. For comparison, in the cycle before this, Bitcoin reached a record high in December 2017, and a bear market bottom twelve months later.
If the current cycles play out in the same pattern, then the low should have come last November, and it turns out that BTC did indeed drop to its lowest point of the year, around $15,500, precisely. at this moment.
The timing seems almost too impeccable, which can make one wonder if there aren’t more shocks in store, except that as we now approach three months past that low and head towards the next Bitcoin halving in 2024, it would be oddly late to revisit a deeper trough at this point.
Add to that the fact that in 2022 Bitcoin fell below its previous cycle high, which was just below $20,000 in 2017. This breakout of the high in 2017 was not widely expected, and when Bitcoin crashed below this level, this should have indicated that the market was acting erratically and that BTC was oversold.
Even though this was not followed by Ding, however, there was further speculation that the price would drop, possibly to $12,000. These predictions echoed, in reverse, some of the voices that had insisted that BTC was heading towards $100,000 even as it hit the peak of its 2021 bull run.
Watch the recent FMLS22 session on NFTs for Fintechs ranging from asset class to ownership machinery.
A unique chaotic year
Bitcoin plunged to those depths below 20,000 in 2022 at the dramatic and disastrous climax of an already brutal year. First, Terra/Luna collapsed, knocking out Celsius and Three Arrows Capital, but as seismic as those collapses were, they almost paled in comparison to the implosion, towards the end of the year, from FTX.
For people outside and not paying attention to crypto, all the damage that happened in 2022 before the fall of FTX may have been barely registered at the edge of the radar, but when FTX went down, it penetrated with force in the mainstream news cycle, which gives an indication of the level of destruction that was unfolding.
It was that headline Disaster centered on FTX which caused Bitcoin’s 2022 bear market to unexpectedly fall below previous highs of 2017. As such, it’s hard to imagine, in a new year and with the evolution of the crypto world , that a similar low is likely to be approached again.
Looking back, 2022 appears to have been a perfect storm for Bitcoin and crypto as they not only battled collapsing protocols and platforms, but did so against the backdrop of monetary tightening, continued policy fallout worlds of Covid and the war in Eastern Europe.
With all of this in mind, on an enlarged monthly chart, it’s starting to look like Bitcoin sailed away, just at the end of the year, a cyclical low suggesting momentum could now be pushing it into a new phase.
p>NFTs on Bitcoin?
Curiously, Bitcoin’s resurgence has coincided with an explosion of thorny disagreements in what we might loosely call the Bitcoin community. It’s the kind of controversy that erupts on the fringes but could potentially become a point of wider significance, and revolves around the emergence of NFT’s (or something very similar) on the Bitcoin blockchain.
Bitcoin is intended to function like money, which means that its units, the satoshis (there are 100 million satoshis in a bitcoin), are fungible. However, through an unforeseen creative use of Bitcoin’s Taproot upgrade, it is possible to convert individual satoshis into non-fungible artifacts containing media, such as images, which are stored directly and permanently on-chain.
These NFT-like objects are known as registrations and use a protocol called ordinals. Purists insist that this is an unnecessary misuse of the network, taking up limited block space. Proponents, on the other hand, claim that registrations generate transaction fees for miners and that Bitcoin is inherently open to unlimited experimentation.
From a broader perspective, NFTs are an area of crypto that are attracting considerable interest, and while this current debate is specialized and may seem niche, it is plausible that early experiences with ordinals could turn into a significant fork from Bitcoin’s original focus.
Either way, it comes as the crypto markets experience a refreshing break from the overcast weather of the past year and reinforces the sentiment that for Bitcoin and crypto, the possibility of More optimistic and interesting times seem viable again.
This article was written by Sam White at www.financemagnates.com.
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