It may feel like an eternity, but just over a year ago, Bitcoin (Bitcoin 0.06%) It hit an all-time high nearing $70,000. Since then, the world’s first and most valuable cryptocurrency has fallen by around 75%, posting a 65% loss in 2022.
Like when Bitcoin hit previous all-time highs, the correction after a meteoric rally is larger than usual, but the 2022 decline is likely to be driven by a string of bankruptcies, scandals and other events that have shaken investor confidence. It got worse. After that, Bitcoin crashed.
We have plenty of reasons to be optimistic about 2023, but we also want to be realistic. Personally, I hope Bitcoin treats investors better this year.
2023: The Year Before the Next Bitcoin Halving
Bitcoin, like most other cryptocurrencies, is considered the bell cow of crypto because of its high value relative to the rest of the industry. I think it could be a good year for the coin, but probably not as good as 2021.
That belief comes down to Bitcoin price action during (and during) halvings, a mechanism in the cryptographic code that slows down the rate at which new Bitcoins circulate. These half-lives occur roughly every four years, and the next one is not set until May 2024, he said.
In the past, Bitcoin typically bottomed out about a year and a half after the next halving. So, with less than 18 months to go until May 2024, a bottom has likely been reached, so buying today seems very tempting and further risk seems minimal.
But more importantly, what will Bitcoin do in the lead-up to its halving? On average, Bitcoin’s price is typically 60% of its all-time high when the next halving arrives. If this pattern continues again, Bitcoin should be close to $40,000 by May 2024.
It’s 2024, but I believe 2023 will be the year Bitcoin gains momentum and approaches $40,000. However, this is by no means a smooth ascent. Against the backdrop of current economic factors such as rising interest rates and persistent inflation, risk-on assets like Bitcoin may remain highly volatile.
The future won’t necessarily play out like the past, but I will continue to believe in data until proven wrong.
As for a possible price target for 2023, we are a little hesitant to provide a specific number that Bitcoin could reach, but as we approach the next halving, Bitcoin could make a small profit. The data suggests that there is
Notably, after Bitcoin had a negative year, it has averaged a 70% return and never had a back-to-back decline. If Bitcoin brings him a 70% return in 2023, its price will be around $28,000.
Predictions and speculation are common and can be a little fun at times, but this should not be used as a reason to time the market. Rather, these data should be used to drive long-term investment profitability.
More than any other asset in history, Bitcoin rewards investors who hold on to the longest timeframes. And with the recent price collapse in 2022, that strategy should not change.
We hope that Bitcoin owners have a better year than 2022 and that 2023 is just the beginning for the cryptocurrency to reach all-time highs in the years to come.
RJ Fulton has a position in Bitcoin. The Motley Fool has a position in and recommends Bitcoin. The Motley Fool’s U.S. headquarters has a disclosure policy.