In this deep dive, we take a look at Bitcoin (BTC) and its performance in the first quarter of 2023. The beginning of the year saw tumultuous events in the financial and crypto sector. What can we expect for the rest of the year and does the recent price increase across the crypto industry offer a harbinger of what to expect in the near future? Take a look with us in this deep dive.
Overview of recent Bitcoin news
The crypto market has not been silent in the past quarter. The uncertainty in the financial markets has certainly affected many cryptocurrencies. Several banks fell and Binance also had a surprising announcement that shook up the crypto industry.
Fall from a crypto friendly bank
The bank Silvergate capital announced its bankruptcy in March. The crypto-friendly bank, together with New York Signature Bank, was one of the few banks that accepted crypto deposits. As a result of the bankruptcy of these banks, the crypto market saw a sharp drop in price. For example, the price of bitcoin fell from about $ 21,750 to almost $ 19,600, which represents a drop of almost 10% in almost 24 hours (source: Coingecko).
Binance buys large amounts of BTC
Binance had earlier this month a surprising announcement that caused the crypto market to rise sharply. For example, the popular crypto exchange has converted nearly $1.0 billion in Binance USD (BUSD) into bitcoin, Binance Coin (BNB) and Ethereum (ETH). The exchange’s CEO, Changpeng Zhoa, announced the major transaction via Twitter where he also shared the transaction on Etherscan to show proof of the imposing purchase. Following Binance’s announcement, bitcoin surged from around $20,000 to nearly $26,000 in just a few days.
Bitcoin Analysis
In this section we look at various data regarding bitcoin. We take a look back at the price development in the past 3 months and compare it with the on-chain data. Do the price developments also translate into the adoption of bitcoin?
Price performance in Q1 2023
The 2021 bull market took Bitcoin to a new all-time high of nearly $70,000. This was followed by a strong price crash in 2022 after financial markets started to weaken and crypto institutions failed, examples are the bankruptcy of FTX, Celsius and BlockFi. In 2023, however, we will see a different price trend. Figure 1 shows how bitcoin has undergone an impressive price development in the past 3 months.
At the beginning of this year, the price was still below $17,000, at the time of writing the price is not far from $29,000. This amounts to an impressive increase of almost 70% in about 3 months. One of the major catalysts of the strong price development is the failure of banks in America and Europe (think of the Silicon Valley Bank in California and Credit Suisse in Switzerland).
The banks are struggling in the current economic landscape due to the rising interest rates by the United States Federal Reserve (FED). Due to uncertainty at central financial institutions, we see that investors are suddenly drawn to bitcoin and other cryptos. In view of one further increase of interest rates in America, some experts expect the bitcoin price to rise even further and even to a valuation above $100,000. We will have to wait and see whether this will actually happen, with still 9 months to go in the year anything can happen.
