3 Reasons to Invest in Bitcoin in 2023
3 Reasons to Invest in Bitcoin in 2023
4/1/2023
3 Reasons to Invest in Bitcoin in 2023
It has been a rocky year for Bitcoin, after seeing an impressive 300+% return in 2020, and an almost 150% return in 2021, many Crypto experts were expecting yet another big year for Bitcoin.
Unfortunately, 2022 has not been good for Bitcoin seeing one of the worst crypto winters unfold and resulting in a 70% loss in its value. The broader crypto-asset space, and equities also suffered. FAANG stocks, known for their extraordinary returns and resilience, felt the adverse effects of tighter monetary policy, ending the year with a 25% loss. Tesla, who sells more electric cars than any other automaker the world over, has seen its share price plummet by as much as 72% in 2022!.
Many are suggesting that rising interest rates and the end of monetary easing, are the key culprits for this prolonged Bear Market. However, BTC’s performance in 2023 may look more like 2021 rather than 2022. Here are three reasons why it may be a great year for Bitcoin in 2023:
1. Institutions are Coming!
2022, was not all bad for the crypto-asset class. This year, more institutional investors have come to view Crypto as a legitimate asset class. Financial giants’ ‘Fidelity ’ surveyed 1,052 institutional money managers across North America, Europe, and Asia. In that survey, 58% of those institutional investors confirmed having purchased cryptocurrencies in the first half of 2022, and 72% said they planned to invest in crypt-assets at some point in the future.
In 2022, we saw The Bank of New York Mellon, the oldest banking institution in the USA & the largest custodian bank in the world, announce that they would start offering custodial services for Bitcoin after seeing demand skyrocket. We also saw the world’s largest asset management firm Blackrock (10 trillion dollars in Assets under Management) partner with crypto exchange Coinbase to offer crypto-asset investment products to their clients.
2. Bitcoin Accepted Here!
Bitcoin critics constantly ridicule it for being absent a real-life use case. Consequently, they make the argument that the demand for Bitcoin right now is nothing short of herd mentality which is causing a bubble, when in actuality, this argument has no merit when considering the prowess of its built in, immutable, monetary policy. Paying for something in Bitcoin is not ideal, and in some places, not even accepted, but that is quickly changing.
In 2022 alone, we saw Alphabet, the parent company of Google announce that they will allow users to pay for Google Cloud using Bitcoin. Mastercard announced its partnership with Crypto firm Paxos to allow traditional banks to offer crypto trading and investing on their platforms. Even Visa revealed plans to eventually allow people to automatically pay their electricity and telephone bills using crypto-assets.
We also saw major sports teams such as the Dallas Mavericks and the Miami Dolphins accept Bitcoin as payment for both game tickets as well as merchandise. Not to mention companies such as Microsoft, AT&T, Burger King, KFC, Subway etc. who all accept Bitcoin as a form of payment! Today, 30,431 venues around the world accept Bitcoin as payment and with the lightning network constantly developing this number is expected to blow up.
3. The Federal Reserve
As previously mentioned, the 2022 Bear Market has largely been due to the Fed’s attempt to combat inflation. Last year, the Fed’s answer to inflation was to increase interest rates from 0.25% -> 0.5% -> 3.75% -> 4%. The aggressive increases have resulted in many assets such as Bitcoin and tech stocks to crash. However, at some point in the future the Fed will stop raising rates. In fact, Jerome Powell, chairman of the Fed has hinted that they will start tapering rates as early as 2023 and begin easing monetary policy in 2023. This will allow rates to stabilise and thus should make investors feel more comfortable getting back into risk-assets such as Bitcoin.
Conclusion:
2022 has been a painful year for Bitcoin bulls. Still, given the turmoil financial markets have endured, some would say Bitcoin has held up better than what people would have expected. Nevertheless, 2023 is a new year that bring with it new things to look forward to; regulation and an ever increasing appetite from large institutions, adoption by global technology and financial firms, and a more accommodating monetary environment from the Fed, all seem to be positive signs of a great year ahead!
