Bitcoin Price Surges to 2023 High: Will It Reach $40,000 Soon
Bitcoin price has soared to its highest level this year, reaching $38,834 on Friday, December 1, 2023. This is the first time Bitcoin has crossed the $38,000 mark since May 2022, when the cryptocurrency sector faced a major setback due to the collapse of the Terra ecosystem.
Source: Tradingview
On the daily time frame technical chart, Bitcoin price is trading above the key moving averages of 20, 50, 100, and 200-Day, showcasing bullishness. The technical indicators like MACD and RSI also support this trend.
What is Driving the Bitcoin Price Rally?
One of the main reasons for the Bitcoin price rally is the optimism of investors, who believe that the Bitcoin ETF will be approved and bring more cash inflows to the cryptocurrency. A Bitcoin ETF is an exchange-traded fund that tracks the price of Bitcoin and allows investors to buy and sell Bitcoin without owning or storing the actual coins. A Bitcoin ETF would make Bitcoin more accessible and liquid for institutional and retail investors, as well as reduce the risks and costs associated with holding Bitcoin.
Another reason for the Bitcoin price rally is the Federal Reserve’s policy of keeping interest rates unchanged. The Federal Reserve Chair Jerome Powell indicated that interest rates would stay the same in his speech at Spelman College in Atlanta on Friday, December 1, 2023. This means that the US dollar would remain weak and the demand for alternative assets, such as Bitcoin, would increase. Bitcoin is seen as a hedge against inflation and currency devaluation, as it has a limited supply of 21 million coins and is not controlled by any central authority.
How the Federal Reserve’s Policy Affects Bitcoin
The Federal Reserve’s policy of keeping interest rates unchanged has a positive effect on Bitcoin, as it lowers the opportunity cost of holding Bitcoin. The opportunity cost is the benefit that is lost by choosing one alternative over another.
For example, if an investor chooses to hold Bitcoin instead of US dollars, the opportunity cost is the interest that the investor could have earned by holding US dollars in a bank account or a bond. When interest rates are low, the opportunity cost of holding Bitcoin is also low, which makes Bitcoin more attractive.
However, the Federal Reserve’s policy also has some negative effects on Bitcoin, as it increases the risk of regulatory intervention and market volatility. The Federal Reserve has expressed concerns about the potential risks and challenges posed by cryptocurrencies, such as money laundering, cyberattacks, consumer protection, and financial stability.
The Federal Reserve may impose stricter regulations or restrictions on cryptocurrencies, which could affect the Bitcoin price negatively. Moreover, the Federal Reserve’s policy may also trigger more speculation and uncertainty in the market, which could lead to more price fluctuations and volatility for Bitcoin.
Can Bitcoin Hit $40,000 in 2023?
Bitcoin price has shown a remarkable performance this year, surging more than 133% and breaking the $38,000 barrier for the first time since May 2022. The rally is driven by the optimism of investors, who believe that the Bitcoin ETF will be approved and bring more cash inflows to the cryptocurrency.
The Federal Reserve’s policy of keeping interest rates unchanged also supports the demand for Bitcoin as an alternative asset. However, Bitcoin still faces many challenges and uncertainties, such as regulatory issues, security breaches, and market volatility. Therefore, investors should be cautious and do their own research before investing in Bitcoin.
Some analysts and experts believe that Bitcoin can hit $40,000 or even higher in 2023, as the adoption and innovation of Bitcoin and cryptocurrencies continue to grow. They point out that Bitcoin has a strong network effect, meaning that the Bitcoin price increases as more people use it and join the network.
They also argue that Bitcoin has a high scarcity value, meaning that the supply of Bitcoin is limited and the demand is increasing, which creates upward pressure on the price. They also cite the historical trends and patterns of Bitcoin, which show that Bitcoin tends to have cycles of boom and bust, followed by new highs.
However, some analysts and experts are more sceptical and cautious about the Bitcoin price prediction, as they see many risks and challenges ahead for Bitcoin and cryptocurrencies. They point out that Bitcoin is still a highly volatile and speculative asset, which is influenced by many factors, such as news, events, emotions, and rumours.
They also argue that Bitcoin faces strong competition from other cryptocurrencies and technologies, which may offer better solutions and features. They also cite the regulatory and legal uncertainties and barriers that Bitcoin and cryptocurrencies face, which may limit their growth and adoption.
Conclusion
Bitcoin price has soared to its highest level this year, reaching $38,834 on Friday, December 1, 2023. The rally is driven by the optimism of investors, who believe that the Bitcoin ETF will be approved and bring more cash inflows to the cryptocurrency. The Federal Reserve’s policy of keeping interest rates unchanged also supports the demand for Bitcoin as an alternative asset. However, Bitcoin still faces many challenges and uncertainties, such as regulatory issues, security breaches, and market volatility. Therefore, investors should be cautious and do their own research before investing in Bitcoin.
Disclaimer
The information contained in this article is intended for informational and educational purposes only. It should not be construed as financial, investment, or trading advice. Investing and trading involve risk, and you should carefully consider your own circumstances and risk tolerance before making any investment decisions.
