Bitcoin Price Could Fall By Half, Analyst Says, Before Testing Record Highs

Cryptocurrencies jumped into the new year with an impressive monthlong rally. Bitcoin is trading near four-month highs after jumping above $22,300 on Friday. The top crypto surpassed its level prior to the collapse of the FTX exchange in November. And its 14 days of consecutive gains as of Wednesday marked its longest winning streak since 2017. But some analysts warn the price of Bitcoin could halve before retesting highs in the second half of 2023.

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The Recent BTC Boom

Global macro fundamentals around views for a Federal Reserve pivot, China’s reopening and an upgraded outlook for the Eurozone economy all factors into the early 2023 Bitcoin run, according to Joel Kruger, market strategist at LMAX Group. The London-based financial services provider specializes in foreign exchange markets and cryptocurrency.

“On the crypto side, we believe longer-term players have been looking to build exposure at perceived discounted prices,” Kruger said. “These players are betting that most of the downside from the crypto implosions of 2022 are now fully priced in.”

Last year saw a wave of bankruptcies from crypto firms as prices plummeted from all-time highs in late 2021. The spring collapse of Terra Labs’ LUNA token and sister stablecoin TerraUSD was the first crypto-domino to fall, wiping out $60 billion in market value. That led to the bankruptcies of crypto firms including Three Arrows Capital, Voyager Digital and Celsius Network.

FTX Group was the final major implosion to round out the year. The second-largest exchange by volume, FTX filed for bankruptcy after overleveraging and mishandling billions in customer funds with its sister firm Alameda Research. Another, BlockFi, filed for bankruptcy shortly after. Bitcoin and cryptocurrencies traded near two-year lows in the months following the meltdown.

A more sustainable recovery will require deeper institutional adoption and regulatory clarity, Kruger says. “While we have seen great strides in this direction, we believe there’s still more room to close this gap,” he said.

Bitcoin Price Outlook

But Kruger warns…

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