Over the past year, the crypto industry has faced many trials, during which the price of many cryptocurrencies has dropped significantly. So far this year, there is reason to hope, as the token market has grown to $1.1 trillion, which is 42% more than a year ago. On the other hand, the price of Bitcoin recently rose above $25,000, and some believe that this might be the beginning of an upward trend.
Bank of America’s latest report says emphasizes, that 2023 might be the year of token price divergence. According to analysts, not only exchange rates may see an increase during this year. The article describes that utility tokens will outperform meme and government tokens during 2023 and may eventually crush them.
A price divergence often indicates a bull market as it signals the end of a downtrend. However, large market capitalization assets such as Bitcoin and Ethereum are significantly affected by macroeconomic factors. According to Bank of America strategists, the strong economic indicators have pushed back the timing of the recession, but they also suggest the possibility of reflation and future rate hikes. As such, these analysts are cautious regarding growth.
“Given that the January rally in risk assets was partly driven by short covering and reversion to the mean, a longer-term environment characterized by higher interest rates might put pressure on growth and thus on digital assets.” – write the analysts.
What will Bitcoin be capable of this year?
Although the year 2023 started off well for the industry, Bitcoin struggled to reach the $25,000 mark and unfortunately was unable to hold onto it. However, this does not mean that the world’s best-known cryptocurrency cannot set new records in terms of its exchange rate. Some pointed out that the price movement from 17,000 to 23,000 was just like what we witnessed in 2017. If the current movement reflects what we saw in 2017, then we can expect a significant increase.
At the time of writing, one BTC was trading at $23,400, according to data from CoinMarketCap.