The historically positive quarter for bitcoin is coming to an end, and it has kept its cyclic pattern this year as well. On Dec. 9, the coin broke its almost two-year record, reaching $44,705. Despite the correction that followed, one can say that its price has returned to the same level as in April 2022, when the collapse of the Terra ecosystem caused a massive market crash.

Bitcoin’s overall upward trend has continued since October this year, and as of the time of writing on December 15, 2023, the exchange traded price has settled at $41,886. There are several factors behind this rise, and here are some of them:

unnamed 3 - Bitcoin Rally: What's Driving the 2023 Rise?

Why is Bitcoin going up?

  1. US Federal Reserve interest rate. An increase in the Fed’s interest rate has a negative impact on the stock market. And while risk assets are considered a separate asset class, their prices may also decline. If the rate hike is halted, investors have more funds to invest in, including crypto assets.
    For example, on December 13, the Fed decided to keep the rate at the previous values of 5.25% – 5.50%, this had a positive impact on the BTC rate, which got back to the $43K mark.
  2. Bitcoin Spot ETF. Anticipation around the launch of spot Bitcoin ETFs including applications from Grayscale, Ark Invest, BlackRock and 21 Shares with a scheduled regulatory review in January 2024. The approval of these funds implies an influx of funds into the industry and an increase in the number and volume of institutional investors in cryptocurrency.
  3. Halving. The process of reducing bitcoin issuance, which the cryptocurrency has already experienced three times, and each time the price of the coin reached new highs. Many investors, seeking the expected profit, begin to actively buy the main coin, pushing its rate up.
unnamed - Bitcoin Rally: What's Driving the 2023 Rise?

Among additional positive factors is the settlement between Binance cryptocurrency exchange and US regulators. The risk of the trading platform collapse has passed, adding to the optimism of market participants.

Correction. What was it?

On December 11, the BTC rate fell by more than 5%, reaching $40,198 at one point. The main coin managed to recover and consolidate at $43 thousand only after the publication of U.S. macro data on December 14.

The first digital currency has been actively growing since the beginning of October, and many market participants warned about the imminent slowdown of the rally.

For example, even before the correction began, representatives of the DecenTrader analytics platform posted on their X (formerly Twitter) that a rapid rise in funding rates is a classic signal of coming volatility.

unnamed 1 - Bitcoin Rally: What's Driving the 2023 Rise?
Source: X (Twitter)

Julio Moreno, the head of research at analytical firm CryptoQuant, shared some metrics indicated that pioneer digital currency’s price was “overheating after the recent rally”.

Additionally, BTC has reached an overbought level above $40,000 amid buyer exhaustion. Taking a look at the coin’s Relative Strength Index (RSI), it shows that it has been severely overbought since December 5, as shown in the chart below.

unnamed 2 - Bitcoin Rally: What's Driving the 2023 Rise?
Source: TradingView

What’s next? Expert views

Glassnode analysts believe that the cryptocurrency market is in the early stages of a bull cycle, with major growth still to come. They compare the price dynamics of the first cryptocurrency with the periods of past market cycles in 2013-2017 and 2017-2021.

Experts at Matrixport, a trading company that accurately predicted the October rise, predict that quotes could reach $125,000 by December 2024.

In the next 12 months, the main virtual currency could reach the $69,000 mark, according to Galaxy Digital CEO Mike Novogratz. He states that claims that the growth of cryptocurrency will be the result of a massive inflow of institutional capital after the legalization of spot crypto ETF funds in the U.S. market. The words of Mike Novogratz are quoted by Bloomberg.

Standard Chartered bank representatives predict that BTC will reach the $100,000 mark by the end of 2024. Experts highlight the potential approval of a spot bitcoin-ETF by the U.S. Securities and Exchange Commission (SEC) and the approaching halving, expected in the spring of next year, as key catalysts for the growth of the main cryptocurrency. Jeff Kendrick, lead analyst at the bank, expresses the opinion that the approval of a spot BTC ETF is likely to happen sooner than many expect.


Why is Bitcoin on the rise right now?

There are several factors behind BTC’s rise, including the non-increase in the US Federal Reserve interest rate, anticipation of a spot BTC ETF, and the halving.

How high will Bitcoin go in 2024?

According to the Standard Chartered bank, BTC will reach the $100,000 mark by the end of 2024.