What a difference a week can make! Just a few days ago Bitcoin’s price was in the $16k range and there was fear in the market. There were fears of the FTX situation continuing to worsen, Genesis potentially becoming bankrupt and the new stream of contagion this could cause. If that wasn’t enough, there were doom and gloom predictions as many experts were claiming that 2023 would be a dark year as the world potentially moves into a deep recession. There were predictions of Bitcoin’s price slipping to $12k or even lower.
Fast forward to now and the Bitcoin market is looking completely different. In just a few days, its price has gone up over $21k, and it looks like it could potentially go even higher. The mood in the market has switched to bullish and people that left the market are now starting to come back. There is growing confidence that the market bottom has been reached, and the market will finally begin to recover from a year of pain.
However, there is a question that is lingering inside all of our heads. Is this Bitcoin rally real? Or, are we all being fooled once again?
Please remember that these are simply my own opinions and are not financial advice. I will give a scenario for each outcome. For this rally being real, and it not being real.
Yes It Is
Simply put, the Bitcoin market has run out of sellers. After a year of nothing but pain, everyone who didn’t have conviction has already sold and left the market. Leaving only the HODLers who never plan on selling. There is a statistic that nearly 65% of Bitcoin hasn’t moved within the last year. The Bitcoin enthusiasts weren’t selling, and instead were buying the coins from those who had paper hands.
The key catalyst for why the price of Bitcoin is beginning to soar is that the massive coin sell-off from BTC miners has finally stopped. They have recently stopped selling and begun to plug in even more machines. This is usually the bottom sign during each bear market cycle. Each cycle there is a capitulation moment for BTC miners where mining becomes unprofitable and are forced to sell off massive amounts of Bitcoin. Some of these companies become bankrupt and are bought up by better-run companies. Once this process has been completed the sell-off ends, and Bitcoin begins its march toward the next bull run. This just happened last week.
Another possible reason why this rally could be real is that there is finally peace in the market. The Genesis situation is looming in the background, but there haven’t been any confirmed insolvencies since November of last year. The Bitcoin market is finally beginning to recover from the FTX fiasco and has returned to price levels we saw before that took place. News broke out last week that FTX while it is still insolvent, had more capital on hand than most were expecting. Which would result in users receiving more of their lost crypto than anticipated. This also caused bullish sentiment in the market.
No, It Isn’t
We went through a few reasons why this Bitcoin recovery rally could be real. But, now let’s discuss why it might not be.
I won’t lie, this recent rally has felt great. It has been amazing to finally have some positivity in this market again. But, there is something I just can’t shake out of my head as well. The timing of this rally feels suspicious and too convenient.
There are several companies right now that would benefit greatly from prices in the crypto market going up. Companies such as FTX and Genesis owe billions of dollars to their creditors. They will likely be paying back creditors in dollars and not crypto. They both have the power to pump crypto markets. Remember earlier in the article when I mentioned that nearly 65% of Bitcoin hasn’t moved within the last year? That also makes it easier to manipulate and pump the price. By having the prices of their coins soar in value, it would allow them to pay back their creditors much easier.
This is just my own conspiracy theory and I could be completely off base. But if there is anything I have learned since entering the crypto market. It is that this market is still the Wild West. What can be manipulated, will be manipulated. We always need to be on the lookout for possible danger ahead.
As for me, I would probably say that this rally is real. The market has run out of sellers, and there was finally some peace in the market. I hope that the negative forecast doesn’t end up being true.
How about you? Do you think this Bitcoin and crypto rally is real?
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