The cryptocurrency market continues to maintain its bullish start to 2023. The 37% rise in total crypto market capitalization in 2023 has sparked global interest. Retail and institutional investors are now looking for insights on price predictions for February 2023 and how the crypto market will behave in the immediate future.
With insights from key on-chain data about Bitcoin, Ethereum and other cryptos, here are the biggest cryptocurrency predictions for February 2023.
Can Bitcoin Retain Its Dominance and Price Increase in February 2023?
The Cryptocurrency market cap reclaimed the $1 trillion mark in January after hiding below $800 billion for most of the second half of 2022. The revival was largely driven by the strong performance of BTC in January.
Slowing inflation and increased institutional demand all played key roles as Bitcoin dominance gained 3% to hit a 7-month high of nearly 45%.
Similarly, the ETH/BTC price ratio showed that Bitcoin gained 30% over Ethereum within the same period. This shows that investors remain firmly attracted to Bitcoin so far in 2023.
The short-term bullish trend in Bitcoin Dominance Index has consistently shown a positive correlation with upward trends in altcoin prices and the global crypto market cap. And conversely, big drops in BTC dominance have also been synonymous with big downtrends in crypto.
Bitcoin holders are mainly priced between $22,000 – $23,000
Bulls predicted a run to $25,000 in February. The broader crypto industry is poised to maintain its coveted $1 trillion valuation. Especially if BTC holds its key $22,500 support point.
Of the 5 million unique wallets monitored by IntoTheBlock IOMAP data sources. 36% of BTC holders In The Money are currently clustered around the $22,000 – $23,000 support point.
IOMAP stands for “Input-Output Market Analysis” or “In/Out of Money at Price” and is a technique used to make predictions about future crypto prices based on the unrealized profit or loss positions of the distribution of token holders on a blockchain network. Historically, holders are most prone to sell their tokens once the price reaches their average breakeven point.
Investors use IOMAP to identify crucial price levels where large buy or sell orders are likely to be placed by comparing the average cost of tokens held in specific wallets to current Bitcoin market prices.
However, Bitcoin may face strong resistance in its march towards the $25,000 mark. Also, a sudden surge in Hash Rate and Bitcoin transaction fees could pose a serious threat to BTC supremacy in February.
Bitcoin Hash Rate Increase May Trigger Another Miner Selloff in February 2023
Bitcoin Hashrate is rising due to rising BTC prices which has caused more miners to join the network quickly. The hash rate measures the total computing power used to mine a block of Bitcoin. It rose by more than 25%, reaching a peak of 295m terahashes per second on January 30.
Bitcoin’s hashing power indicates its resistance to attacks. This provides a constant increase in mining difficulty and also means that miners must now compete for limited block rewards.
Mining woes are predicted to reach a new all-time high in February as even more miners start turning on their machines. Especially if Bitcoin continues to maintain its bullish trend.
However, the trading activity of Bitcoin miners could also significantly slow down the ongoing bullish trend. Miners currently hold around 10% of the total BTC in circulation. This means that the trading activity of miners is a significant driver of price trends in the short term.
On-chain data currently shows a 185% net decrease in the balances of top miners over the past 30 days.
Mining costs are climbing again
Historical data on miner reserve balances – a metric that monitors the total balances of addresses belonging to notable mining pools. ie f2pool, Binance, Antpool, Viabtc, etc. — shows that large miners prefer to build up their block rewards during a bull run.
MacroMicro, a Cambridge University-affiliated analytics platform, provides Bitcoin mining cost data. By observing the global consumption of electricity and daily issuance of bitcoin.
However, the average cost to mine a block of bitcoin exceeds the BTC/USD price. Miners are encouraged to bolster their reserves. If the price of BTC can scale over the $25,000 mark, the selling pressure from miners could ease significantly. Mining accumulation will position BTC well for a sustained bull run in the first quarter of 2023.
Bitcoin NFTs can push transaction fees higher
Bitcoin transaction fees are on the rise. This is thanks to a newly launched protocol that allows bitcoiners to create hundreds of non-fungible tokens (NFTs) on the Bitcoin network for the first time. Previously, most NFT collections were issued primarily on Ethereum and other EVM compatible networks.
Ordinals, a bitcoin-native NFT protocol launched in January, has sparked a fee boom on the leading crypto network as hundreds of users begin creating digital artifacts.
Following the launch of Ordinals on January 21, 2023, average transaction fees on the Bitcoin network have risen above $1.50 as competition for block space increases.
Bitcoin Average Transaction Fee measures the average fee in USD for each transaction processed by miners. Average Bitcoin transaction fees can rise during periods of congestion on the network, as they did after the launch of Ordinals.
The fee increase sparked a heated debate in the Bitcoin community amid predictions of scalability issues and competition for block space.
Bitcoin transaction fees are largely determined by the size of a transaction, and the demand for block space. As the Ordinals platform grows in popularity, competition for block size is expected to cause a continued increase in transaction fees. This could lead to Bitcoin losing dominance points slightly in February as transactional users start switching to alternative networks to avoid large fees.
Still, many Bitcoin developers have thrown their weight behind the NFT platform citing its potential to expand the network’s utility and increase the adoption rate.
Ethereum will close February 2023 with net decrease in supply
Ethereum effectively became deflationary after the completion of the merger and the implementation of Ethereum Improvement Proposal (EIP)-1559. EIP 1559 enables burning a mechanism for gas fees paid for transactions on the network.
The burning mechanism is linked to the intensity of transactions on network usage. This means the more transactions on the blockchain, the more ETH is burned.
Data shows that the increase in NFT transactions across platforms like Opensea is responsible for the recent increase in ETH fire.
Ethereum PoS has burned $108 million so far
According to on-chain data provided by Ultrasound Money, more than 65,000 ETH have been burned since the turn of the year. OpenSea was currently at the top of the Burn Leaderboard in January with ~5,000 ETH burned.
NFT trades are known to move in correlation with crypto markets’ price trends. If Bitcoin and the rest of the crypto market maintain the bullish outlook, ETH could lose February in a net negative supply position.
However, this is not expected to create a breakout in the ETH prices in February, as on-chain data suggests that the investors have already priced in the deflationary stance in the current valuation.
For Ethereum to experience a significant price increase, the network needs to find new demand. The lack of new demand for the second-largest crypto by market capitalization was illustrated by the persistent decline in open interest over the past ten days. Data Revealed from Coinglass Revealed. ETH’s public stake fell by 16% within that period.
Typically, the decrease in open interest means that fewer new contracts are created as investors close out their current positions.
It’s also worth mentioning that in March, Ethereum will undergo the long-awaited “Shanghai Upgrade” – its first major hard fork since the proof-of-play transition in September. Once the EIP-4895 hard fork is complete, 16 million ETH will finally be mined by the validators who help secure the network.
Fears of a massive dump, heralded by the anticipation of the 16 million ETH liquidity re-injection, could lead to a flat February performance for ETH – even as the rest of the crypto market continues to rise above 12-month -highlights to rise.
Expect massive whale action in February 2023 as XRP vs SEC decision looms
The Ripple (XRP) vs SEC legal battle has entered its third year. As the legal proceedings may conclude definitively in February, speculation about the outcome of the case has intensified.
The ruling is eagerly anticipated by the crypto community as well as the traditional financial industry – as it could set the tone for how digital assets will be regulated in the future.
A ruling could determine whether crypto-assets will now be categorized as securities or not. A victory for SEC could mean a massive bearish turn in XRP prices, with institutional investors also likely to drastically reduce their exposure to crypto-assets in an effort to avoid long-term regulatory sanctions.
On-chain crypto data provided by Santiment currently suggests that investors expect positive price action in the wake of the ruling. The funding rate for XRP is positive on top exchanges. While social sentiment was measured by surveying XRP media attention across popular crypto-online channels, a surge in positive sentiment for the altcoin revealed as the court ruling neared.
To conclude, both Ripple executives and the SEC representatives expressed confidence in their chances of success. However, a recent poll conducted by US Attorney John Deaton indicated that the majority of the XRP community wanted a settlement rather than a victory verdict for either party.
Disclaimer
In accordance with the Trust Project Guidelines, this price analysis article is for informational purposes only and should not be construed as financial or investment advice. BeInCrypto is committed to accurate, unbiased reporting, but market conditions are subject to change without notice. Always do your own research and consult a professional before making any financial decisions. Please note that our terms and conditions, privacy policy and disclaimers have been updated.
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