Cryptocurrency markets have taken a turn for the worse, as the SEC navigates through the complexities of approving six Bitcoin spot ETF proposals. The volatility once calmed after Grayscale EFT’s court victory, which momentarily pushed Bitcoin up by 6%. Nonetheless, within less than a week, Bitcoin’s valuation fell, exemplifying the currency’s uncertain trajectory amidst fluctuating economic factors.
Investors and market watchers are keen to understand the implications of Bitcoin’s latest price movement for future cryptocurrency forecasts.
Exploring the Reasons Behind Bitcoin’s Latest Decline
Bitcoin has been akin to a digital seesaw since its inception, with values swinging from remarkable highs to steep lows. Having previously reached a staggering $69,000 in November 2021, the currency now sits approximately 50% lower from that peak.
For the crypto community, the past year was rife with hardships, with 2022 marking a particularly challenging time after the industry reeled from the FTX debacle and Terra Luna’s demise.
Following a turbulent phase, cryptocurrencies once again felt the heat as Bitcoin struggled to maintain the $20,000 level. The dip was largely attributed to the SEC’s legal actions against Binance and its CEO, alleging mismanagement of customers’ funds.
Despite briefly breaching $31,000, inflation fears and a proactive Federal Reserve rate hike to combat these concerns, pulled Bitcoin’s value back to $29,800.
Amid a distressing US banking crisis, subdued inflation, and a weakening dollar, cryptocurrencies saw a resurgence as investors sought refuge from traditional financial systems. Yet, Bitcoin’s value slipped once more, prompting the question: “Why?”
Understanding the Recent Bitcoin Value Decline
Michael Sonnenshein of Grayscale Investments has heralded the conversion of its Bitcoin trust GBTC, suggesting it could unlock significant value for stakeholders. Following a 17% increase in GBTC shares one Tuesday, they subsequently fell 4% the next day.
“The grounds which the SEC had previously stood upon to deny these market products no longer seem to hold water.”
Regardless of SEC’s notable reluctance to greenlight Bitcoin products, Bitcoin Futures ETFs still encountered obstacles in fulfilling optimistic price projections.
The lingering effects of a recent court ruling continue to raise concerns. Furthermore, Bitcoin faced an additional hit when the SEC announced a delay until October to finalize decisions on spot Bitcoin ETF applications. Consequently, the value faced another steep decline to $26,100.
Prospects for the debut of a Bitcoin ETF grew dimmer. An ETF could simplify retail investment in crypto, bypassing the need for wallets or direct Bitcoin purchases.
With the Federal Reserve’s stringent policies, many forecasters speculate that Bitcoin could potentially hit a low of $8,000 in the prevailing bearish market.
Looking Ahead: Bitcoin’s Price Forecast for 2023
Several factors contribute to a bleak Bitcoin outlook in 2023, with expectations for the approval of the first spot Bitcoin ETF being deferred, perhaps until 2024. Yet, there lies a widespread belief that the approval could trigger a fresh wave of investment, possibly elevating Bitcoin to new heights.
While an ETF nod could influence price predictions, financial experts are eyeing a unique event expected to impact Bitcoin’s future value. They equate the currency’s current depreciation to a slingshot being drawn back in anticipation of the next Bitcoin halving in 2024. This quadrennial event will slash miner rewards by half to 3.125 BTC, ostensibly creating a rally as supply diminishes.
