Bitcoin has had a strange year so far. Its unusual financial activity has left some people asking "is Bitcoin dead?", or whether 2023 will be a poorly performing year for the asset. But is this the truth? Does it look as though Bitcoin is going to struggle for the next few months, or is the future bright?
Of course, if the answer to "is Bitcoin dead?" is yes, then it could have a trickle-down effect on various other crypto sectors. For instance, it can cause us to question whether Bitcoin mining is also dead, as the mining community is an instrumental organ that keeps the network functional and operational. Naturally, this would be detrimental to this side of the industry, especially considering how, for some, Bitcoin mining is their primary source of income.
The market sentiment on Bitcoin will also give us a good insight into the crypto market as a whole, as BTC is still viewed as the leader of the pack. While this may change one day, the general crypto-economic logic is that altcoins will follow Bitcoin's trends. This means that, if Bitcoin is dead, then the general crypto market could be liable to suffer the same fate, too. Such activity would be visible on all crypto exchanges that list Bitcoin, including Binance and Kraken.
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Is Bitcoin Dead? A Technical Analysis Overview
Oftentimes, when fearmongers ask "is Bitcoin dead?", they first focus on the trading floor. Or, in other words, some technical analysts may notice a pattern or trend which spells disaster. And so, it makes the most sense to focus on this aspect to begin with. A common signal that leads to these types of conclusions is the infamous death cross.
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A death cross is a special sign where a shorter-term moving average crosses below a longer-term moving average. Typically, a death cross is identified when the 50-day moving average crosses below the 200-day moving average. The pattern is seen as a strong sell signal by traders and is used to predict potential weakness in the market. The term "death cross" is used because it suggests that the long-term trend has turned negative and that there will be a downward spiral of prices.
Bitcoin experienced one of these death crosses in February. This could be one source of the questions asking “is Bitcoin dead?”. The name itself suggests disaster, although, it should be pointed out that death crosses are not always bad, and Bitcoin has experienced numerous of them during its lifespan. In fact, Bitcoin has already moved beyond this cross, suggesting more positivity.
Does this mean the death cross was insignificant? Not necessarily, although it could suggest that it was more relevant to the day-trader than the long-term holder. Realistically, any highly volatile asset will come across the odd death cross from time to time, and so they may not be the greatest indicator of wide-scale activity. Therefore, this is not a fair way of assessing "is Bitcoin dead?"
However, Bitcoin’s death crosses tend to stick in the public eye slightly more than the death crosses of other assets. This is likely due to the asset still being a dark horse of sorts, with media outlets placing extra scrutiny on it. In other words, situations like this can make a mountain out of a molehill, with people jumping to conclusions too fast to the ominous "is Bitcoin dead?" question.
That being said, this is not the only technical analysis sign that could be leading people to question is Bitcoin dead. The Bitcoin rainbow chart, a specialized chart that uses historical data to predict how Bitcoin will rise and fall over a span of years, suggests that Bitcoin is on the up, but very slowly, with the rest of 2023 being the time to accumulate and hold tight.
The rainbow chart is somewhat controversial in the industry, as it was created specifically for Bitcoin, and so it does not have a historical legacy in the traditional markets. However, it has become highly influential, often getting posted and passed around various online trading communities, such as those found on Twitter and Reddit.
One of the biggest criticisms of the rainbow chart is that it is overly optimistic; even when it predicts downward activity, it indicates that Bitcoin will always eventually trend towards higher numbers. This is, of course, an indication that it should be taken with a grain of salt. But nonetheless, its mere existence and influence in the space means that it could definitely be contributing to the fear that Bitcoin is dead in 2023.
Understanding the Dead Cat Bounce
There is another big technical analysis question that has been potentially leading people to question is Bitcoin dead. Some have theorized that Bitcoin is experiencing a dead cat bounce, which refers to a temporary price recovery in a declining asset or market. It does not signal a reversal of a long-term downtrend but rather a brief respite before the asset's decline resumes.
Traders and investors may mistake this temporary uptick as a sign to buy, only to realize later that the overall trend remains bearish. A dead cat bounce typically occurs due to short-term market factors such as a change in investor sentiment, and an attempt to regain the experiences that occurred in the past. Dead cat bounces lead to a very strong downward turn, which can be even more severe than before the bounce ever began.
A Bitcoin dead cat bounce would mean that the coin peaked in the last big bull run, and is now set to fall significantly in times to come, with this current upward trend being a temporary upwards shift as a type of retaliation against the upcoming future. It is extremely hard to measure with certainty whether the current market sentiment reflects this until the bounce is fully over (if there even is one to begin with). Meaning, this metric alone will not offer an answer to is Bitcoin dead?
Some analysts attempt to pinpoint this behavior, but it can never be precise. However, the general idea behind the notion of a Bitcoin dead cat bounce is that it might have reached its top at $68,789.63, never to touch that point again. Some people are of the belief that this number is the ceiling.
Realistically, it is fair to say that this price was astronomical, which might make some people worry that it was overvalued, and therefore lead to questioning "is Bitcoin dead in the near future?". Bitcoin, and cryptocurrency as a whole, are still far too new to say with certainty whether any of them are priced higher than their actual worth.
One argument for the Bitcoin dead cat bounce theory being true is that there are other cryptocurrencies that perform its utility of being a decentralized form of transactions more efficiently and affordably, and that Bitcoin has only made such gains because of name recognition.
However, one argument against the dead cat bounce theory is that Bitcoin is mostly used nowadays as a store of value, more so than a transactional tool, and so its most present utility is as a way of people holding onto their wealth in a trusted and battle-tested asset. In this sense, it is more aligned to something like gold, than it is to something like the US dollar.
Either way, this current bump in price has confused the entire industry, and so it makes sense that people are questioning is Bitcoin dead. Some of this discomfort has arisen from people being unable to determine why its price has jumped so much, as there has not been any particularly fascinating or relevant news to suggest its rise in Q1 and Q2 of 2023.
In fact, the entire crypto industry is still licking its wounds after the monumental fall of FTX, and some investors further fear that the fall of Silicon Valley Bank will have a negative knock-on effect on crypto. In essence, it is possible that the theory arose from a lot of head-scratching and overall misunderstandings of why the space is acting this way.
A Look at Bitcoin Mining
One way of answering the question of is Bitcoin dead, is to take a look at its mining community. Miners are the lifeblood of the ecosystem, and so if their numbers start to dwindle, then not only could it spell a poor price performance for Bitcoin, but it could quite literally cause the coin to become nonfunctional, as miners are necessary for triggering transactions.
With this in mind, we need to find if Bitcoin mining is dead in 2023. A good place to look at for this is YCharts, which reports BTC mining revenue. If the revenue was to drop to a certain level, then it could suggest that people will leave Bitcoin and look for other income avenues that are more lucrative. However, the current stats are relatively healthy and stable, with overall revenue at above $20 million per day.
This has been the case for most of the year, although there was a time in early January when it was below this point. Even then, straddling below $20 million is not a bad rate for the entire mining community. It is certainly not enough to suggest that Bitcoin is dead.
In fact, it appears that the Bitcoin mining space is doing very well. There were some worries about how this sector would do in 2022, as this was when China enforced their ban on mining, however, the coin held strong and its mining community moved to other countries, causing minimal damage. This means that if Bitcoin is dead in 2023, then it will not be due to the miners. At least, there is no indication of this right now.
Are Altcoins Going to Take Over?
Typically, when people ask is bitcoin dead, they are implicitly extending the question to the entire cryptocurrency market. This is because, since the start, Bitcoin has been the market leader, and has yet to be toppled. With this in mind, there are people who are broadening the question to ask whether both Bitcoin and Ethereum are dead, along wth every other digital asset.
The general logic is that, if Bitcoin falls, everything must fall. It is seen as the lynchpin of the industry, and so many people are drawn to this conclusion. However, this might not be a fair assessment. While it might have made sense 5-10 years ago, when the industry was so novel that most coins and tokens copied Bitcoin’s whitepaper and tried to emulate its success in very direct ways, the industry has matured significantly since.
With this maturity has come a genuine sense of individuality and uniqueness, spread across the space. What this means is that many of the top-performing coins and tokens in the market have been able to significantly distinguish themselves from Bitcoin. You could argue against this and say that the crypto industry’s fluctuations typically reflect the fluctuations of Bitcoin, but we do not know if this would happen if bitcoin really was to die.
If push came to shove and Bitcoin did end up falling apart and crashing, there is still good reason to believe that the rest of the market would hold up, or at least some of it. The industry has a strong set of intelligent and competent minds spread across it, along with swarths of retail and institutional money, all aimed at slightly different goals and ideals. Bitcoin’s hypothetical death would likely dent them, but it may not erode them.
The Potential for The Flippening
A good concept for illustrating the possibility that other cryptocurrencies might withstand the notion that Bitcoin is dead is The Flippening. This is a mythological scenario where Ethereum one day rises above Bitcoin in terms of its market cap or dominance, putting Bitcoin into second place in the crypto wars; a position it has never been in before.
Every now and again, this concept gains traction in the industry, with people theorizing that Ethereum will one day take the top spot. The closest we have ever come to this happening is in 2017, when BTC dominance dropped to 39% and Ethereum rose to 31%. However, ETH was unable to capitalize on this, and so the flip never actually occurred.
Currently, the situation is nowhere near as favorable to Ethereum, as Bitcoin sits at a comfortable 45% dominance. Although, this has not stopped people from discussing the possibility. One factor that has reignited this debate is to do with some relatively recent updates the network has undergone. For starters, Ethereum’s shift to pure Proof-of-Stake activity has helped position it positively in the public eye.
This is because, in doing so, it has massively dropped its carbon footprint, making it seem more palatable in eco-friendly circles. While the move to Proof-of-Stake, referred to as the Merge, has done little to affect Ethereum’s price, it has moved the needle in its favor in a media setting. It is hard to quantify this, but this fact has meant that news outlets, especially non-crypto-specific ones, have gone easier on it as they can no longer argue that it is as environmentally harmful as it used to be. Making this argument nowadays has much less weigh and significance to it.
Considering how the cryptocurrency space is teetering on the edge of being mainstream, something like this could keep Ethereum in people’s good graces, which could manifest in it keeping a steady price, should something happen to allow it to overtake Bitcoin. Of course, this is highly speculative, and so this does not confirm that a Flippening will happen any time soon.
Another update that has placed emphasis on Ethereum is its ERC-4337 Standard. This is a concept that allows for so-called Smart Accounts, which offer unique and customizable login rules. Not only this, but they provide the possibility of recovering accounts, should certain necessary details get lost. This is a huge update for newcomers, as it makes the process of crypto transactions less daunting.
The fact that this makes accessing your own accounts easier if problems arise means that Ethereum could be marketed as more beginner-friendly than other blockchain projects on the market. Specifically, it could position Ethereum as the best onboarding network in the space, triggering more activity and potentially distracting new users from Bitcoin.
The State of Bitcoin Cash
The question of whether Bitcoin and Ethereum are dead leads to another question: is Bitcoin Cash dead? The answer to this is sadly less optimistic than the former. Bitcoin Cash has always had a tumultuous history. In a nutshell, this is a fork of Bitcoin that was presented as a more cutting-edge alternative that was simultaneously more aligned with the supposed true vision of Satoshi Nakamoto, the pseudonymous creator of Bitcoin.
While this looks good on paper, the numbers present a more dire reality. Bitcoin Cash is currently hovering around $100, much lower than Bitcoin itself, which is near $29,000. This asset has struggled to cement its position in the industry as a true competitor to BTC since the fork officially happened. While it did receive a decent bump in price during the last big bull run, it did not hold onto that, and has been unable to stay fully within the public conversation or hold a good spot in the market cap rankings.
Taking a look at Bitdegree’s data, it currently rests at number 32 in the overall rankings, which is a disappointing number, considering the fact that it carries the Bitcoin name, and that its fanbase claim it as the legitimate vision of the industry's most important asset. With this in mind, it is reasonable to answer the question of “is Bitcoin Cash dead?” with a tentative “perhaps at one point” due to its poor performance.
That being said, there is always a chance that BCH could find better footing in the future. Bitcoin cash has name recognition, and a strong (albeit relatively small) collection of fans, and so there could be a way for it to reposition itself at some point. It is also still listed on top exchanges such as Binance and Coinbase, which is definitely a positive.
The Future of Bitcoin
Another way of framing the question of is Bitcoin dead, is to ask whether it will stand the test of time. Some people believe that if an asset cannot withstand what the coming years have in store for it, then it is practically a walking corpse. This is especially the case for people who choose to hold BTC, rather than regularly trade it.
With this in mind, it is hard to say with certainty how exactly Bitcoin will fair. One perspective is that it is slower and more expensive to transact than a lot of other coins in the market. Plus, its ecosystem is incapable of being as rich and varied as blockchain projects like Ethereum, or even Binance Chain. This leads some people to theorize that it will one day be forgotten and ignored.
There could be some truth to this, as Bitcoin is architecturally capped in some ways when it comes to further developments and innovations. But this does not necessarily mean it is a death sentence, as it might not need to keep up with such changes due to its strong name recognition, and the fact that it is commonly used as a store of value nowadays.
An argument could be made that, realistically, if this industry was focused solely on the merit and developments of the popular coins within it, then Bitcoin would already be buried below most blockchain ecosystems like Ethereum. Considering how that has not happened, it could mean that Bitcoin does not need to change to fit the constantly updating industry.
In its favor, Bitcoin has a highly decentralized user base and mining community, a strong legacy with an untarnished reputation, and is a household name that has even been adopted as legal tender in some places. Not only this, but it is currently the only cryptocurrency that is confirmed by the SEC to not be a security. This is a huge deal as it offers it some legal protections in the US.
If factors like this are what keep Bitcoin going, then it does not need to compete with other projects on technological grounds– it has already done enough to cement its position on the world stage. While other projects fight to keep fresh and novel, Bitcoin remains reliable and streamlined. Not only this, but its long history acts as a blueprint for the rest of the industry.
In other words, it would take a lot to completely topple it. Some speculators are worried that the global recession, triggered in part by the COVID pandemic, will lead both Bitcoin and Ethereum to die, as it might mean there is less money going around. Although, both coins did well during 2020, when the pandemic hit, and so there is still hope that they can hold strong against the current worldwide market conditions.
Not only this, but Bitcoin has a good track record with times like this, as it was born as a type of revolt against the 2008 global recession, acting as an alternative to the current problems caused, in part, by centralized entities. If this is anything to go by, Bitcoin may just fair well against the 2023 recession as well. Of course, they are not entirely equal scenarios, as nowadays institutional investors take Bitcoin seriously, and also invest in it. Therefore, it no longer acts as the life raft against centralized market behavior as it once did.
There can never be a definitive answer to the question of is Bitcoin dead. The possibility of a dead cat bounce, signs of death crosses, and the growing strengths of Ethereum could indicate poor performance in the future. However, they are all highly speculative signs, and there is just as much reason to believe that Bitcoin will persist.
BTC still has an untarnished reputation, a longstanding history, a healthy mining community, and is viewed as a household name around the world. While none of this will ensure it stays strong forever, there will need to be some much more worrisome signs on the horizon for it to really fall apart and fail. That being said, 2023 could be a tough year for it, if the rainbow signal is to be taken seriously.
Not only this, but a global recession may cause it to struggle to reach the high numbers that it had in 2022. That being said, even this is not confirmed, as Bitcoin does not function in the same way as traditional assets, and so a recession might not cause a slump in price like some people are worried about.
In truth, there is simply not enough indication that Bitcoin is dead in 2023. This is an unpredictable industry, and so it is hard to say with any certainty what the next months will bring. Perhaps the wisest thing anybody can do is hope for the best, and monitor its price on exchanges like Binance, Coinbase, and KuCoin, as well as on BitDegree’s crypto price charts.