2 Reasons Why Bitcoin Price is Soaring in 2023

Bitcoin price has staged a strong comeback in 2023 as investors rushed to buy the dip. The BTC/USD exchange rate surged to a high of 21,465, the highest level since November. It has risen by more than 30% from the lowest point in 2022. Here are the top reasons why BTC price is soaring.

Mild recession hopes

Bitcoin and other financial assets like stocks and gold have rallied because of the falling inflation in the United States and around the world. Consumer inflation dropped from 7.1% in November to 6.5% in December. Core inflation dropped to 5.7%. 

And on Wednesday, data from the US showed that wholesale prices dropped by 0.5% in December, higher than the expected 0.1%. The producer price index (PPI), rose by 6.2%, the lowest level since March 2021. This decline happened because of the falling energy prices.

Another data showed that retail sales tumbled in December. They dropped by 1.1% in December, the biggest decline in 2022. In a note, an analyst at RSM said:

“The lag impact of elevated inflation weighs heavily on U.S. households, it’s very clear that the median American consumer is still reeling from the loss of wages in inflation-adjusted terms.”

A recession is often seen as a bad thing. But in the financial assets, it can be seen as a positive thing since it means that the Fed will work to prevent a hard landing of the US economy. Therefore, there is a likelihood that the Fed will lower the pace of rate hikes this year.

Buying the dip

The other main reason why the Bitcoin price has soared is that investors are buying the dip. Bitcoin plunged by more than 70% in 2022, making it one of the worst years. Therefore, this means that Bitcoin got oversold. Historically, investors tend to go bargain-hunting when this happens.

Another reason why Bitcoin is rising is the developments surrounding FTX. After collapsing in 2022, FTX has been in bankruptcy proceedings. In a statement, the company said that it had identified $5.5 billion in liquid assets. $1.7 billion of these funds were in cash while $3.5 billion of them were in crypto assets. About $415 million of funds were stolen from the ecosystem.