So far, Bitcoin investors have seen 2023 as a satisfactory year. Since the beginning of the year, the price of the No. 1 cryptocurrency has grown from USD 16,540 (USD) to as much as USD 30,486. BTC printed this annual high on April 14 on the price table.
Most recently, however, Bitcoin switched to correction mode. At the time of writing, a unit of the digital gold still costs $27,109. In May, in particular, the trend was constantly downwards. This makes the past month the first of this year with a negative performance, as BTC analyst PlanB notes on Twitter.
But the signs are still positive, says BTC-ECHO market expert Stefan Lübeck: “Overall, the upward movement that has been going on since the beginning of the year is still intact.” In his opinion, whether Bitcoin will continue to follow the long-term trend in June depends primarily on two factors.
On the one hand, it remains to be seen whether the positive development around the new Hong Kong crypto hub will actually have a positive effect on trading volume in the coming months. The injection of fresh capital into the crypto market from the Far East could give the key crypto currency new impetus.
BTC-ECHO market expert Stefan Lübeck
The Hong Kong Securities and Futures Commission (SFC) paved the way for licensing crypto exchanges in the Special Economic Zone in late May. Exchanges can apply for admission to trading from May.
According to Lübeck, the other price-determining factor is the global money supply M2. This includes cash circulating worldwide as well as short-term sight deposits, i.e. bank money.
If the money supply, i.e. the liquidity in the system, increases, investors are more willing to invest in risky assets such as Bitcoin. According to Lübeck, economic development is the decisive factor for this turnaround in monetary policy.
If the Fed, ECB and Co. return to a policy of monetary easing in the course of ongoing economic problems and the amount of fiat money in circulation increases again, institutional investors will increasingly invest their money in risky investment sectors such as cryptospace.
BTC-ECHO market expert Stefan Lübeck
Consolidation in summer?
Grigori Akimov, analyst at crypto fund provider F5 Crypto, is more likely to see a consolidation phase in early summer given the strong performance this year.
Bitcoin is currently struggling with a significant macro resistance zone between EUR 27,000 and EUR 30,000. A plausible forecast for June 2023 would be consolidation in a sideways trend between EUR 23,000 and EUR 27,000.
Grigori Akimov, crypto analyst at F5 Crypto
In addition, according to Akimov, it is also summer – as a rule, things are rather moderate on the (crypto) markets. “Summer is typically a quieter time for markets.” For the time being, the analyst does not expect sustained upward breakouts.
Inflation in the euro area is declining: good for the bitcoin price?
Meanwhile, inflation has recovered slightly. According to current figures from Eurostat, the rate of inflation within the euro area for May was only 6.1 percent. That is at least 0.9 percentage points less than in the previous month.
The restrictive measures taken by the European Central Bank (ECB) are bearing fruit; however, it is considered unlikely that the unexpectedly sharp drop in the inflation rate will trigger a turnaround in interest rates. Market observers expect more moderate interest rate hikes in the coming months. After all, the central bank is still miles away from its target inflation rate of 2 percent.
The bottom line is that falling inflation rates in the context of risky investments are positive.
Mining Difficulty and Hashrate
Fundamentally, however, everything is fine with Bitcoin. If you look at the hash rate, for example, you can see positive market sentiment on the part of the miners. After all, the hashrate has been showing tremendous growth for months. The cumulative computing power in the BTC network is currently 366 exahashes per second (EH/S). For comparison: in January the value was 241 EH/s.
On the one hand, an increasing hash rate leads to a more secure Bitcoin network, since attacks such as 51 percent attacks become less likely. On the other hand, the investments of the miners also point to positive price forecasts of the companies, which compete for market share in anticipation of the upcoming Bitcoin halving.
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