Every investor wishes to know Bitcoin’s future price as it opens up a lot of opportunities to make profitable deals. However, predicting cryptocurrency prices comes with uncertainties due to various factors. To provide you with insights, we’ve collected and analyzed all the relevant data! So, let’s take a closer look at the potential price of Bitcoin by the end of 2023.
What affects the price of bitcoin?
Bitcoin is a major cryptocurrency, accounting for about 51% of the crypto market.
However, in the context of the whole financial market, BTC’s share appears rather small. The crypto market capitalization is $1,1 trillion, which is less than the Bank of America’s result of $9,5 trillion but comparable to Alphabet Inc.'s $1,3 trillion. Bitcoin’s capitalization ($587 trillion) is slightly higher than Tesla’s ($585 trillion) but at the same time smaller than NVIDIA’s ($673 trillion).
Understanding Bitcoin's market share is essential for forecasting its future movements. Its relatively small size makes it dependent on larger market players, and vice versa — a larger asset provides more independence.
Fund market
We can determine Bitcoin’s dependence on the world market using a chart that shows BTC's correlation with the S&P 500. The S&P 500 index represents changes in the stocks of the 500 most capitalized companies traded on the US market. This index is used to assess the overall health of the fund.
A correlation of one indicates a full correlation between Bitcoin and the S&P 500, while zero suggests complete de-correlation. In February 2023, the correlation was nearly absolute. Now, in June 2023, we observe a slight de-correlation.
It turns out that bitcoin often follows the stock market. Therefore, the state of the stock market is a significant factor in predicting Bitcoin’s year-end forecast.
In June 2023, the US Federal Reserve (Fed) did not raise interest rates for the first time in over a year. Prior to this, the regulator had constantly raised the rates to beat inflation caused by geopolitical tensions.
A Fed rate hike increases the value of dollars in the system, which leads to higher loan costs and slower economic growth. You can clearly see the changes if you compare the rate chart alongside the S&P 500:
📉 The S&P 500 declined when the Fed raised rates.
📊 When the rate hikes slowed down, the index stabilized and moved sideways (no serious rate changes).
📈 The S&P 500 started rising when the rate stopped increasing.
Fed rate chart and S&P 500 comparison. The blue curve represents the Fed rate, and the multicolored curve represents the S&P 500.
Fed Chief Jerome Powell predicted two more rate hikes in 2023. Additional rate hikes may not have a significant impact on the stock market, which has been under pressure for a year. Consequently, we can anticipate further market strengthening and Bitcoin’s growth following the stock market.
Seasonal factor
Hisrorical observations show that December is not the best time for Bitcoin. In 46% of cases, the BTC price has declined during this month. This can be attributed to annual reports and individuals cashing out to fund expensive holiday purchases.
Regulation
In 2023, the US Securities and Exchange Commission (SEC) launched a regulatory campaign against the crypto industry. The SEC filed lawsuits against two major exchanges, Binance and Coinbase, and also accused 60+ cryptocurrency issuers of illegally issuing securities in the form of digital tokens.
The good news is that the SEC does not seem to consider Bitcoin a security. However, the bad news is that the commission is likely to continue pressuring the crypto industry, potentially leading to sell-offs that may affect BTC.
Bitcoin ETF
In June 2023, discussions regarding the possibility of launching an Exchange-Traded Fund (ETF) based on spot Bitcoin in the United States began in the crypto community. An ETF is an investment fund that allows institutional investors to gain access to the crypto market. It provides a legal framework for investing in cryptocurrencies.
The logic is as follows: cryptocurrencies are not 100% legal, but the fund is totally clear under the law. Therefore, investments in cryptocurrency-based ETFs are preferable for large players.
The crypto industry’s attention turned to ETFs when investment giant BlackRock filed an application to launch a Bitcoin trust on June 16. It is important to note that Bitcoin trust differs from a Bitcoin ETF. With a trust, it is impossible to redeem the underlying cryptocurrency; only the trust's securities can be redeemed. Market participants' future considering coin buybacks may not be satisfied with such conditions. Nonetheless, amid the news, BTC reached $30,000.
Euphoria
Positive news, such as the potential launch of a spot Bitcoin ETF in the US, can trigger a bull run. In the money-making race, greedy investors can influence the market, driving Bitcoin’s price to new local highs of $35.000 or even $40.000. If a correction phase occurs in December, the still bullish BTC may cost more than it would without a bull run.
It is challenging to predict growth solely based on news, but this point should be taken into account anyway.
Halving
Bitcoin experiences a halving event every 210k mined blocks in its blockchain. Halving reduces the mining speed by half. Observations show that halvings have usually triggered Bitcoin’s growth. Here is how it works:
🌟 Bitcoin supply is limited to 21 million coins, with 19.4 million already on the market. Halving cuts the rate at which new Bitcoins enter the market by half, but it doesn’t affect demand.
🪙 The deflationary nature of BTC makes it possible to stand in contrast to traditional fiat currencies, which can be printed by authorities, leading to decreased value due to increased supply. Bitcoin’s limited supply helps support its value.
📈Bitcoin has already undergone three halvings, each followed by BTC’s growth and new all-time highs.
🗓️ The next halving is expected in spring 2024 (approximately in April)—4 months after December 2023. As a rule, the four months preceding halving serve as a time of preparation for a bill run. During this period, BTC usually experiences a positive sideways trend (without significant price changes but with portions of growth).
"Rainbow" bitcoin chart. The vertical lines are halvings, and the black curve is the cryptocurrency rate. Bitcoin usually encounters halving in the blue zone.
How much will bitcoin cost by the end of December 2023?
Considering the fund market's positive dynamic possibility, the approaching halving, and the possible launch of a spot Bitcoin ETF launch in the US, it is plausible to anticipate a recovery in BTC’s growth by the end of 2023. However, regulatory pressures on the crypto industry and last years' crypto market behavior make it clear that significant growth chances are not that great.
Analyzing Bitcoin’s behavior in the last cycle four months prior to halving in 2023, it is reasonable to assume that BTC may meet the New Year somewhere close to $30.000 – 35.000.
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This article is not an investment recommendation. The financial transactions mentioned in the article are not a guide to action. Itez is not responsible for possible risks. The user should independently conduct an analysis on the basis of which it will be possible to draw conclusions and make decisions about making any operations with cryptocurrency.
