Will BTC prices continue to go up, or is this a trap?
So far, this year has been good for Bitcoin’s price.
She’s risen around about 36% between the start of January, to the time of this writing.
(From ~$16,540 to ~$22,515).
Which has everyone asking the golden question: “Is this a bull trap, or are we now officially in a bull run?”
“Bull trap,” “bull run,” if you thought you’d accidentally opened the ‘Rodeo Daily’ newsletter, fear not.
Put simply, a ‘bull trap’ is the perception that things are going to continue to go up; lots of people get excited, buy a bunch of BTC, only for it to fall again.
A ‘bull run’ is when things go up, and continue to go up.
(Like what we saw between Jan 2021 and May 2022).
So what’s going to happen?
No idea. But we can give you some theories.
The ‘bull trap’ theory:
People sold their crypto at the end of 2022 to capitalize on the losses that they could claim for tax purposes.
Because there’s no wash-sale rules for crypto (i.e. they don’t need to wait 30 days after selling to buy back in) they started buying back in as soon as January hit, which has caused some upward momentum.
Eventually, demand will decrease and the price of BTC will return back to ~16,500.
The ‘bull run’ theory:
Crypto bulls believe inflation is down (i.e. people will start to have more money to spend), ~$16,500 was the bottom, and it’s only up from here!
As discussed last week, investing is a psychological game. The more people who believe in something, the more the price will be affected.
Overall, there’ve been no fundamental changes in BTC since the start of January, and we can’t be too sure on what has caused the upward momentum.
So, for now: hoooooray!
...but who knows what's next.
