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Bitcoin has been on an exciting journey than most asset classes since its inception in 2009. Its value has endured extreme ups and downs, with the Bitcoin price ranging from mere pennies to thousands of dollars in a decade. There are several reasons for the price movements as well as key factors that influence Bitcoin’s value.

Bull runs and bear markets are major contributors to Bitcoin’s price volatility. During the bullish phases, Bitcoin prices experience significant upswings, often driven by increased media attention, institutional adoption, or positive regulatory developments. Conversely, bear markets are marked by prolonged price declines, usually caused by regulatory uncertainty, security breaches, or market sentiment shifts.

The 2019–2021 bull run was historical. By mid-December 2019, Bitcoin was trading at $6,635.84. The following year, COVID-19 stopped the world in its tracks, and the economy took a turn. Subsequent government policies and lockdowns further fueled investors’ fear, prompting them to consider Bitcoin as a hedge against looming economic hits. By December, Bitcoin was trading at $29,000.

Heightened investor interest further pushed the price in 2021. Bitcoin reached a record high of over $40,000 less than a month into the new year. In March, Tesla fueled mass interest in the digital currency when they announced they had acquired Bitcoin worth $1.5 billion. In April, institutional interest in Bitcoin surged again when the Coinbase exchange went public. Bitcoin price increased in tandem, reaching a new high of $63,558. A brief lull ensued between April and July before a resurgence caused by the launch of a Bitcoin ETF in the US in November 2021. By mid-November, Bitcoin was trading at an all-time high of $68,789.

Despite its incredible run, major global macroeconomic events caused a negative market sentiment in 2022. The price started falling as the pandemic persisted, and a new variant emerged. Crypto exchanges started folding, and investors lost confidence in the currency. In November 2022, the FTX exchange filed for bankruptcy, causing widespread panic among investors. In what’s now famously known as the “crypto winter” of 2022, Bitcoin entered a bearish market that has persisted into 2023.

Bitcoin’s past performance provides some interesting insights for investors, who can reasonably predict future price movements by analyzing past trends, patterns, and reactions to events. Even though other factors can still impact the digital currency’s volatility, positive sentiment invariably leads to price increases. Conversely, negative sentiment leads to price declines. However, it’s important to note that sentiment alone cannot predict long-term price movements in the crypto market because it changes rapidly based on news and events.

Experts use other tools to understand the market, like the relative strength index (RSI) and moving average convergence divergence (MACD). These indicators help to see if Bitcoin is overbought or oversold, giving hints about when prices might change direction. For now, Bitcoin’s increasing adoption rate, growing hash rate, and rising transaction volume indicate a growing interest in cryptocurrency. Based on that, experts cautiously predict Bitcoin may experience periods of continued growth as more institutions adopt it as a store of value.

Still, predicting the future price of Bitcoin is difficult. The market can change quickly, and unexpected events will still happen. If you’re interested in this asset class, make sure to research and understand the risks before you decide to invest.

McClatchy newsroom and editorial staff were not involved in the creation of this content.

Jon Stojan is a professional writer based in Wisconsin. He guides editorial teams consisting of writers across the US to help them become more skilled and diverse writers. In his free time he enjoys spending time with his wife and children. He can be reached at jonstojan4167@gmail.com.

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