Rising Bitcoin Market 2023: A Bull Trap or the Beginning of a Bull Market?
Currently, everything is essentially rising in the bitcoin market. Bitcoin was worth around $16,000 for a time; as of right now, it is worth over $21,000. Additionally, the market value of cryptocurrencies has risen to roughly $1 trillion, bringing an additional $200 billion to the market. Recurring purchases show that investors are more secure, according to the public.
This climb raises the issue of whether it will resemble the other peaks and valleys we have seen, a signal of the beginning of a significant rally, or whether it will simply be a bull Trap.
How The Big Players in The Market are Tricking The Small Investors
A bull Trap, in short, is when large investors, meaning a group of market sharks, buy large amounts to give the impression that the market is rising. As a result, people see the rise and start buying when it goes up. Then, the big investors sell and collect their profits, which include the new people's money who entered at a high price. Therefore, the market falls and we lose.
There is also the possibility that big investors or sharks open a short deal, and they want to cover their losses. Because they hoard, for example, bitcoin and expect in the coming period that the price will fall, "betting that the price will fall." But as the time approaches as expected, meaning that the market is supposed to fall, instead, bitcoin goes up and stocks, and other currencies go up as well.
As a result, they panic and buy at high prices to minimize their losses. This causes the entire market to rise even more.
Analyzing The Factors Driving The Market's Rise 2023
Firstly, a few days ago, a CPI report was released, which is the first indicator of the market's direction. At that time, it was expected that there would be a strong movement in the markets and indeed, the market began to rise.
When the report came out, we saw that inflation had dropped from its peak in June 2022 of "9.1" to now 6.5.
Another thing that causes the market to fall is an increase in interest rates, as you know, and the cause of the increase in interest rates is inflation.
Therefore, for six months in a row, as inflation drops, it indicates that this trend will continue for the foreseeable future. And we also have Jerome Powell, the Federal Reserve Chairman, who wants to lower inflation.
And he is currently achieving results. He wants to reach 2%. Currently, we are far from this number but it's possible to get there gradually.
There are also talks about printing more money. Therefore, the question here is whether a two percent rate is reasonable. But generally, the important thing is that inflation has started to drop.
The second indicator is the interest rate decision that will be released at the end of this month, which is the beginning of February.
Everyone expects Jerome Powell to increase the interest rate, but this time it's not the same numbers as before, meaning it's possible this time to increase by a quarter of a point.
I don't expect him to say there is no increase because he fears that prices will rise again quickly.
If the interest rate is not raised, this means that the market will grow in a crazy way.
As a result, there is a possibility of inflation returning quickly. If it's possible to increase by a quarter of a point and this is enough to push the markets to rise again gradually.
These are the main reasons behind the market's rise, in addition to all indicators that have risen, " Nasdaq, S&P 500" compared to numbers from last month.
The Impact of The FTX and TERRALUNA Collapses and Their Aftermath To The Cryptocurrency Market
The crash in the cryptocurrency markets began last year in March. One of the biggest reasons was the collapse of TERRALUNA, which led to the collapse of other platforms such as VOYAGER, and CELSIUS, which had been more adventurous in their investments.
After that second blow, it was at the end of the year and it was the collapse of FTX. This led to investors losing hope in the market at least in the short term. After that, there was a big crash.
It is also possible to say that FTX and its manager Sam Bankman-Fried were the cause of TERRALUNA's collapse because he was playing with their currency for profit, possibly without intent.
But this person who caused TERRALUNA's collapse and definitely caused FTX's collapse, Sam Bankman-Fried, was arrested but then released and is awaiting trial.
However, according to the bankruptcy court, the money lost by investors in FTX may be returned. That means that the investor was expected to get fifty dollars for every thousand dollars. But if things happen as expected and this happens, all the money will be returned.
This news is very powerful for the markets because the biggest reason for the cryptocurrency market crash was the collapse of this platform. As a result, people's confidence will return.
We also have the VOYAGER platform, which was supposed to be bought by FTX but it also failed.
After that, Binance made an offer to buy VOYAGER, but the American SEC financial securities commission opposed this. This spread fear in the markets.
But a New York judge said Binance has the right to buy it and SEC does not have the right to reject it.
As a result, if this happens, at least half of the investors' money in VOYAGER may be returned to them, or more. This is also a piece of good news for the markets.
The Cryptocurrency Market's response to The Positive Economic News
All of these are strong news that leads to the rise of the markets. Because we've been through periods where there's no good news, everything's bad, inflation is rising, interest rates are rising, and platforms are collapsing.
Now, on the contrary, platforms are returning their money, inflation is decreasing, and by the end of the month, it is expected that interest rate increase will decrease, and oil prices will decrease. This means that all current economic news is good and strong for the market to rise.
Of course, it was obvious that the markets would rise because the signals were indicating that at least a strong movement was expected by the end of the month.
The date of the announcement of the interest rate by the Fed. And during this period, traders benefited from the rise or fall.
But generally, always be careful because anything can happen. Therefore, manage your money, and don't leave money in the market that you may need because the cryptocurrency market is difficult to predict.
Currently, the market has been rising for more than a week, which may make some traders take their profits and this may decrease the market.
But also, there are some people who are greedy and want to buy based on the possibility of further rise.
But we've been through a long period of Bear Market and decline, and these periods don't last forever because history is on our side and the news these days is very positive, so if it continues, it may be the beginning of a new Bull Market.