Bitcoin’s performance in 2023 so far has been favourable, with the price increasing by 68 percent since January. The movement appears to have instilled confidence in Bitcoin holders, who look to be increasing at the fastest rate since 2021. But is the reading strong enough to start a bull run?

Predicting the price of Bitcoin, especially in the long run, is not a delicate art. Several factors can influence the price of the coin, including mining difficulty, halving events, options contracts, futures contracts, and other macroeconomic issues such as interest rates.

Similarly, fundamental metrics such as total Bitcoin holders can affect its price as well. Recently, data tracker Santiment stated that the total number of Bitcoin holders in 2023 is rising at its fastest rate since early 2021. The research firm added that the last time such a trend took place, Bitcoin spiked to its record high of $64,000 in April 2021.

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There could be several causes for the rapid increase in BTC holders — during the first few months of 2023, Bitcoin has traded at a premium to its 2022 close. Not only that, but since the beginning of the year, the king coin has outperformed most traditional assets such as gold, oil, the US dollar, and treasuries. As a result, a logical explanation of the recent buying spree could be that the majority of market participants feel confident in Bitcoin’s ability to rebound to earlier highs.

Surely, the same is true for long-term possibilities, right? There’s more to it than meets the eye. To begin, keep in mind that Bitcoin’s success is dependent on a variety of internal and external factors, and repeating a bull run would be difficult until all the stars align for Bitcoin.

For instance, a separate Santiment graph revealed that the number of unique tokens moved on the Bitcoin network continues to be sluggish despite the coin’s price gain in 2023 so far. Unique tokens simply refer to Bitcoins owned by different addresses. While the total number of holders may have increased, those holders are not engaging actively in the transfer of their coins on the network.

In fact, only $105,000 worth of tokens per day has moved among different addresses in 2023, down by 56 percent when compared to its one-year peak in June 2022. Santiment explained that a bull run is likely to sustain itself when the price rises along with the utility of the coin, which is not the case here. In other words, long-term holders appear to be buying BTC while short-term holders and traders are not actively engaging with Bitcoins.

What does this mean for Bitcoin’s price?

It means that while we may get to see prices such as Bitcoin’s 5 percent daily gain on April 10, a repeat of the 2021 bull run might still be unlikely until all holders are on the same page.

Additionally, one must also remember that macroeconomic factors are not ideal just yet for another Bitcoin bull run. The US Federal Reserve increased the interest rate by 25 bps in March to 5 percent, its ninth consecutive rate hike. The Fed also warned of ongoing increases amid a banking crisis. In theory, high-interest rates reduce the demand for risky assets such as crypto.

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Meanwhile, as per a Reuters poll, there was a 65 percent probability of a US recession in the coming two years, with forecast growth of only 1.0 percent in 2023 and 2024.

Conclusion

All in all, a rise in the total number of Bitcoins is a positive development but it is unlikely that the same will trigger a bull run that was similar to the one observed in 2021. Several tailwinds persist in the broader economy and investors might have to ride out a period of sluggish global growth before parking their funds into Bitcoin once again.