Bitcoin (BTC) Price Under Bearish Pressure, Could Dip To $10k Soon! Here’s Why

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The post Bitcoin (BTC) Price Under Bearish Pressure, Could Dip To $10k Soon! Here’s Why appeared first on Coinpedia Fintech News

In November, the U.S. consumer price index (CPI) rose 0.1% from the previous month, slower than the 0.4% pace in October. This is a sign that the Federal Reserve’s efforts to bring down inflation are making progress.

The data also boosted cryptocurrency prices, as less-worrisome consumer-price increases may give the Fed more room to relax interest-rate hikes. Annual CPI growth was 7.1%, according to the Labor Department, below the 7.3% forecast by economists in a FactSet survey.

How Was The Crypto Market Impacted By The Report?

The largest cryptocurrency by market value, Bitcoin (BTC), has been relatively stable in December. However, it saw a 1.6% increase in the minutes after the news of the CPI data was released, reaching over $17,930. The Ethereum native cryptocurrency Ether (ETH) has also seen gains, with a 6.9% increase in the last 24 hours, reaching $1,335.

Sigel’s prediction

Despite the positive news about the CPI data, investing giant VanEck predicts that Bitcoin (BTC) could continue to face challenges as some miners may go bankrupt, overshadowing the overall favorable macroeconomic conditions.

VanEck’s head of digital assets analysis, Matthew Sigel, predicts that the “crypto winter” will reach its lowest point in the first quarter of 2023 when Bitcoin’s value drops to between $10,000 and $12,000. This prediction is based on factors such as the potential collapse of FTX and inflation stress.

How do miners affect BTC prices?

The Bitcoin miners have faced a challenging year, with rising costs and falling prices.

Miners’ income is tied to the price of Bitcoin because they receive it as a reward for solving complex mathematical problems to validate blockchain transactions. These rewards are often sold to fund their operations.

When the price of Bitcoin drops, as it has this year by 61%, weaker miners may sell their reserves, which can cause the price to drop further. This cycle of selling and falling prices, known as a “death spiral,” could lead to the collapse of some mining operations.

In order to survive, miners may be forced to sell their coins. Since July, miner wallet balances have plummeted by $444 million, to 1.818 million BTC. This trend may continue as most mining companies are currently unprofitable.

“Nearly all MVIS Global Digital Assets Mining Index components are burning cash and trading below book value. Due to increasing electricity costs and decreased Bitcoin values, we believe many miners to restructure or consolidate, “Sigel wrote.

2023: Will The Pump & Dump Continue?

From the all-time peak of $69k in November 2021, the BTC price would drop to a low of $12k in the following year. Bear markets in the past have bottomed out at around 85% of previous highs.

According to Sigel, the bitcoin price will reach $30,000 in 2023.

In Conclusion 

While a CNBC survey indicated that only 8% of Americans have a favorable view of cryptocurrency, VanEck analysts believe that Bitcoin has potential in emerging markets. At a media event this week, VanEck highlighted the fact that 2.5 billion people live in countries with more than 7% inflation, while 15 currencies have declined by more than 20% year-to-date.

Matt Sigel, VanEck Global’s head of digital assets research, believes that 2023 could be a hopeful year for cryptocurrency, but the “crypto winter” will need to be overcome first.