5 Reasons Why Bitcoin Rallied to Kickstart 2023
Anyone who knows about Cryptology can understand what has gone over Bitcoin in 2022. After a long pandemic, the crypto industry was growing rapidly, and then the crash happened. Within just nine months, Bitcoin plunges 64%. But in recent times, Bitcoin has started to develop its empire more strongly, and investors are still wondering if Bitcoin can regain its kingdom.
As the world rang in the New Year, Bitcoin was already gearing up for a bullish start to 2023. With its value soaring and its popularity skyrocketing, the world is buzzing again with excitement over the elusive cryptocurrency. It is a new start for Bitcoin to roar to life like a mythical creature awoken from its slumber.
In this blog post, we will look into the top 5 reasons why Bitcoin rallied to kickstart 2023. Because the rise of this crypto will decide the fate of the crypto world in the future.
5 Reasons Why Bitcoin Rallied to Kickstart 2023
What caused the sudden fall of Bitcoin in 2022? There were multiple factors, like the fall of Luna currency and FTX, which was the largest crypto exchange. But Bitcoin is still the leading crypto in the world. Besides, there was a slight rise of Bitcoin on the crypto stock at the beginning of 2023. That motivates people to keep their trust in these digital currencies. But what caused this sudden surge? So, here are the top 5 reasons why Bitcoin rallied to kickstart 2023:
1. Institutional Adoption
Institutional adoption of Bitcoin has been a significant driver of the cryptocurrency's price. As more major companies and financial institutions have started recognizing Bitcoin as a legitimate asset class, demand for cryptocurrency has surged.
In October 2022, the Bank of New York Mellon became the first major US bank to offer Bitcoin exposure to its clients, and other banks have followed suit. In addition, major financial players such as Fidelity and BlackRock have also started exploring cryptocurrency opportunities.
This increasing institutional adoption of Bitcoin has significantly impacted the cryptocurrency's price. As large investors pour money into Bitcoin, demand for the cryptocurrency has increased, driving up its price. At the same time, this has helped to legitimize Bitcoin as an investment option.
2. Global Economic Uncertainty
Global economic uncertainty has also played a role in the recent surge in Bitcoin's price. As geopolitical tensions and economic instability have increased worldwide, investors have started to turn to alternative investments. In this case, Bitcoin is helping them to diversify their portfolios and protect their wealth.
The ongoing Russia-Ukraine war is just one example of the geopolitical risks that have led investors to view Bitcoin as a more reliable investment option. Inflation and rising prices of necessities have further fueled this trend as people search for ways to protect their wealth from the impact of these economic factors.
The COVID-19 pandemic has also significantly impacted the global economy, leading to market volatility and uncertainty. As a result, investors are turning to Bitcoin as a hedge against inflation and as a way to diversify their portfolios.
3. Regulatory Clarity
As the old saying goes, "clarity is power," and nowhere is that more true than in the world of Bitcoin. Regulatory clarity has emerged as a key driver of the cryptocurrency's recent surge in price, providing investors with the confidence and legitimacy they need to enter the market.
Recent regulatory developments in major countries such as the United States and Canada have positively impacted Bitcoin's price. The CFTC and SEC jointly try to regulate Bitcoin for tax purposes in the US. While in Canada, every cryptocurrency exchange must register and become a member of IIROC.
These developments have reduced uncertainty in the market and increased investor confidence. As a result, demand for Bitcoin is positioning itself as a valuable asset in today's economic landscape.
4. Halving of Bitcoin Supply
Bitcoin's halving process is a key factor in the cryptocurrency's price and market dynamics. Every four years, the number of Bitcoins that can be mined is cut in half, which reduces the rate at which new Bitcoins enter the market.
The significance of this process lies in the fact that Bitcoin has a fixed supply cap of 21 million coins. That means the new Bitcoin creation becomes rate slow, and the cryptocurrency becomes more scarce and valuable.
The most recent halving occurred in May 2020, which reduced the number of new Bitcoins entering the market from 12.5 to 6.25 per block. This reduction in supply has significantly impacted Bitcoin's price, as investors anticipate increased demand and scarcity.
5. Increased Retail Demand
In recent months, several positive developments in the cryptocurrency industry have influenced market sentiment toward Bitcoin. For example, major companies like Google and Mastercard have announced plans to accept Bitcoin as a form of payment, which has increased its mainstream appeal and legitimacy as a currency.
In addition, there have been significant advancements in decentralized finance (DeFi). That has further fueled investor interest in Bitcoin and other cryptocurrencies. DeFi platforms offer various financial services, such as lending and borrowing. They are accessible to anyone with an internet connection, which has the potential to disrupt traditional financial systems.
This positive news and increased attention from major companies and investors have increased retail demand for Bitcoin.
Above mentioned are the top 5 reasons why Bitcoin rallied to kickstart 2023. However, investors should be cautious due to the highly volatile and unpredictable nature of the cryptocurrency market. Despite this, Bitcoin's growing interest and potential as an emerging asset class make it an asset worth watching for investors of all levels of experience. Keeping an eye on the factors driving Bitcoin's growth can provide valuable insights into the future of the cryptocurrency market.