Bitcoin Market Cap Surges by $500 Billion in 2023, According to Matrixport
According to a recent report by Matrixport, Bitcoin’s market capitalization has grown significantly in 2023, increasing from $320 billion to $827 billion. The Singapore-based crypto investment firm highlights the crucial role of U.S. inflation in the accumulation of Bitcoin wealth.
Inflation and Bitcoin Wealth
The official inflation rate in the U.S. has dropped from 8% to 3.1% over the past year, and analysts predict a further decline to 2% in 2024. Despite the Federal Reserve’s plans to reduce interest rates, the gap between Fed Funds rates and the Consumer Price Index (CPI) is expected to remain constant. This situation is likely to lead to further accumulation of Bitcoin wealth.
“While the Fed has guided the market in cutting interest rates by 75 basis points in 2024, the gap between Fed Funds rates and CPI is significantly wider, notably 220 basis points, and will remain, at least, constant, even if the Fed cuts, as inflation is expected to fall, according to our model.” – Matrixport
Macroeconomic Factors Supporting Bitcoin Prices
The report emphasizes that macroeconomic factors will contribute to higher Bitcoin prices in 2024. The limited supply of new Bitcoins during halving cycles by miners is one such factor.
No Expectation of Another Rally in 2023
However, analysts caution against expecting another rally in 2023. Historically, Bitcoin has only seen a few percentage points increase between December 24 and December 31.
“This means that we might have seen the highs for the year, and prices could continue to consolidate into year-end. Bitcoin’s market cap rose from $320 billion to $827 billion, roughly a $500 billion wealth increase for Bitcoin holders.” – Matrixport
Predictions for Christmas Holidays
During the Christmas holidays, reduced market activity is anticipated, leading to a decline in the funding rate. However, elevated volatility may persist as traders hedge their positions in anticipation of the potential approval of a Bitcoin spot exchange-traded fund (ETF). K33 Research predicts that the U.S. Securities and Exchange Commission will likely approve spot Bitcoin ETFs within the next three weeks.
Hot Take: Bitcoin’s Market Cap Soars by $500 Billion in 2023
According to Matrixport’s report, Bitcoin’s market capitalization experienced remarkable growth in 2023, surging from $320 billion to $827 billion. This increase of $500 billion has led to significant wealth accumulation for BTC holders. The report highlights the role of U.S. inflation as a critical factor influencing Bitcoin wealth. Despite expectations of declining inflation rates, the gap between Fed Funds rates and CPI is projected to remain constant, further supporting Bitcoin’s value. Additionally, macroeconomic factors and limited supply contribute to higher Bitcoin prices. While no rally is expected in 2023, reduced market activity during the Christmas holidays may lead to decreased funding rates but continued volatility due to anticipation of a potential Bitcoin ETF approval.
By
By
By
By