In a recent Bloomberg report, it has been suggested that the rise of Bitcoin price to over $42,000 is just the beginning of a new crypto super cycle that will push the world’s largest cryptocurrency to over $500,000.
According to Bloomberg, proponents of this theory argue that Bitcoin represents a new monetary order that is captivating Wall Street and fueling a “palpable sense of euphoria” within the digital asset community.
Bitcoin Price Potential Soars
The remarkable performance of the Bitcoin price in recent months took many by surprise, as the cryptocurrency posted three consecutive monthly increases, including another 11 percent in December alone.
The enthusiasm surrounding Bitcoin’s price rally has led to optimistic predictions of further gains, often based on intuition or technical analysis.
The cryptocurrency has experienced a significant price revival in 2023, with its value surging over 150% thus far. Market observers attribute this surge to growing anticipation of a potential approval of a Bitcoin exchange-traded fund (ETF) for trading in the United States.
Per the report, the prospect of an ETF has led to jubilation within the industry. Coinbase CEO Brian Armstrong suggests that “Bitcoin may be the key to extending Western civilization.” Forecasts regarding the future price of Bitcoin have ranged from $50,000 in the immediate term to above $530,000.
Matt Maley, chief market strategist at Miller Tabak & Co., cautions about the rapidly changing sentiment in the asset class, highlighting the importance of the liquidity influx caused by the pandemic in driving Bitcoin’s strong rally in 2020 and 2021.
Maley suggests that without a similar liquidity injection, some of the optimistic predictions surrounding Bitcoin’s future value may be unrealistic.
The long-awaited launch of a Bitcoin-based ETF in the United States aims to facilitate easier access to the cryptocurrency for money managers, potentially attracting billions of dollars in new investments to the space.
BTC ETF Speculation Sparks Optimism
Researchers at Kaiko note a noticeable shift in the market sentiment since mid-October, driven by increasing institutional interest in the potential approval of a spot BTC ETF and a more favorable macroeconomic environment.
The researchers also highlight recent inflows into crypto investment products and a seven-month high in daily spot-trading volumes in November.
Nevertheless, while excitement about a broader crypto rally often spreads across social media platforms like X (formerly known as Twitter), it is important to acknowledge Bitcoin’s historical volatility.
According to Bloomberg, the cryptocurrency has experienced multiple hype cycles in recent years, with celebrated gains followed by significant downturns.
Despite Bitcoin’s recent gains and departure from a prolonged consolidation phase, Bloomberg suggests that a significant correction may still be on the horizon. At present, Bitcoin is trading at $41,800, displaying sustained bullish momentum as it strives to reclaim the $42,000 level.
The outcome remains uncertain whether the cryptocurrency will successfully consolidate above this critical level, positioning it favorably for continued upward movement throughout the month.
Alternatively, the current yearly high level could act as a formidable resistance barrier for the Bitcoin price, further supporting Bloomberg’s thesis of a potential correction.
Featured image from Shutterstock, chart from TradingView.com