3 reasons why 2023 will be a big year for Bitcoin

After a 59% return in 2020 and a 60% return in 2021, the 67% decline to date was clearly not the type of performance. Bitcoin (Bitcoin 11.56%) Investors had high hopes for 2022.

But as legendary investor Peter Lynch once said, “The key to making money in stocks is not being afraid of them.” While Lynch was talking about the stock market before cryptocurrencies, his advice is equally prescient for today’s crypto investors. Many investors have sold their crypto holdings, including bitcoin, during the current crypto winter, but for every seller there is a buyer, and bitcoin is a long-term investment with confidence in bitcoin’s future. was purchased by the house.

Rising interest rates and the end of monetary easing are the main causes of Bitcoin’s decline. However, based on many recent developments, Bitcoin’s future could look a lot more like 2021 than 2022. Here are three reasons why the year ahead could be better for top digital assets.

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1. The agency is coming…

First and foremost, as more institutional investors invest in Bitcoin and see cryptocurrencies as a legitimate asset class, Bitcoin becomes the largest ($300 billion market cap) and most accessible. I was.

According to the Fidelity Digital Assets annual survey conducted by financial giant Fidelity management, 58% of surveyed institutional investors purchased cryptocurrencies in the first half of 2022. This was not a small sample size either, as Fidelity surveyed his 1,052 institutional investors across North America, Europe and Asia. These institutional investors have far greater purchasing power than the average retail investor, and in theory their growing presence in the market could drive the price of Bitcoin higher. I have.

Taking the growing demand from large investors as an example, Bank of New York Mellon (black 4.68%)It is the oldest bank in the United States and the largest custodian bank in the world. black rock (black 13.47%)the world’s largest asset manager said it would work with crypto exchanges coin base (coin 10.74%) Provide an Aladdin trading platform to clients who had Bitcoin on Coinbase.

2. …so do good companies

At the same time, Bitcoin usage is heating up among major technology companies and financial institutions. For years, Bitcoin’s critics have tried to invalidate its value as an investment by saying it doesn’t have many use cases.

It’s starting to change rapidly. Parent of Google alphabet (GOOG 7.75%) (Google 7.58%) We recently announced that customers will be able to pay for Google Cloud using Bitcoin and several other cryptocurrencies. master Card (MA 6.85%) has announced plans to work with cryptocurrency company Paxos to help traditional banks offer cryptocurrency trading and investment in the platform.

3. Fed rate hike easing could boost bitcoin

The Federal Reserve has launched aggressive interest rate hikes in 2022 to combat inflation, but the outcome is yet to be determined. One of the things the rate hikes have managed to do is crash many speculative and long-term assets like bitcoin and technology stocks. After raising the . If the Federal Reserve can get its foot off gas and keep interest rates stable, investors should feel more comfortable returning to assets like Bitcoin.

Skate in the direction the puck is going

After all, 2022 has been a rough year for Bitcoin investors. However, as an early-stage asset class that remains largely speculative at this point, its value has held up better than expected given the turmoil in which traditional financial markets have fallen. Looking ahead, 2023 looks set to be a big year for Bitcoin. At the very least, it should be much better than 2022, thanks to increased investment from large institutional investors, increased usage by global tech and financial firms, and a more flexible financial environment from the Fed. Bitcoin is still a risky investment, but we believe that all investors can benefit from having a small allocation to Bitcoin in their portfolio.