Everyone would not be surprised due to the reappearance of Bitcoin in 2023

Bitcoin (BTC -1.46%), which had a dismal 2022 in which it lost about 65% of its value, is off to a scorching start in 2023. In reality, Bitcoin’s performance in January last year was the best (up 39.4%). That’s especially noteworthy considering the fact that an unexpectedly large number of analysts were pessimistic about Bitcoin’s chances at the beginning of the year.

Bitcoin is still my favorite cryptocurrency to purchase right now, despite the fact that several other coins are currently surpassing it. Bitcoin has a proven track record of recovering from bad years, and 2023 won’t be any different, in my opinion. This is why.

Bitcoin’s potential for growth

time to buy bitcoin

One reason is that, at the moment, Bitcoin’s growth possibilities are unmatched. The immense growth potential of Bitcoin across eight distinct industry segments was a major factor in Cathie Wood of Ark Invest’s latest upgrade of her price forecast for the cryptocurrency to $1.48 million (up from $1 million last year). According to Wood, Bitcoin is expected to make up 25% of the global remittances market and up to 10% of a crucial indicator of money supply for emerging nations by 2030. At the same time, Bitcoin may account for as much as 6.5% of large institutional investors’ investment portfolios.

These new predictions for Bitcoin are consistent with what is happening in the international financial markets. For instance, Bitcoin continues to advance as a substitute for fiat money in emerging markets. Brazil’s radical new crypto legislation, which opens the door for the use of Bitcoin as a medium of exchange and an investment asset, was unveiled towards the end of 2022. It makes sense that Ark Invest believes that bitcoin might someday make up 10% of the M2 money supply of emerging economies given that Brazil is the twelfth-largest economy in the world.

Also, Bitcoin is increasingly becoming a popular risk asset. On both an absolute and risk-adjusted basis, Goldman Sachs (GS -0.46%) declared Bitcoin to be the world’s best-performing investment asset in January. In summary, Bitcoin delivers the best value for your money given the level of risk you are willing to face. This is consistent with what huge institutional investors, who increasingly consider cryptocurrencies as simply another risk asset, are telling us. When it teamed up with BlackRock (BLK 0.44%) to provide cryptocurrency investment services to major institutional investors last year, Coinbase (COIN -0.59%) made headlines. In 2023, this pattern is most likely to persist.

Risk factors

Bitcoin tightrope balancing act crash and burn falling value scene as bitcoins fall into the fire in the background

Choosing an investment involves more factors than just prospective gains, of course. Risk has to be taken into account as well, and I believe Bitcoin truly shines in this area. While certain cryptocurrencies were affected by the FTX (FTT -1.29%) implosion, Bitcoin was mainly unaffected. Nobody attempted to link the demise of the sizable cryptocurrency exchange to Sam Bankman-Fried, the former founder of FTX, or to Bitcoin.

The issue of regulatory risk is another. No one has been arguing that Bitcoin should be categorized as a security, despite the Securities and Exchange Commission (SEC) spooking the market by arguing that even mainstream cryptocurrencies like Ethereum (ETH -1.06%) could be considered securities. In fact, the majority of analysts concur that Bitcoin might be the only cryptocurrency that is exempt from SEC regulation. Also, as Bitcoin is still a proof-of-work cryptocurrency, it is not affected by the worry, apprehension, and ambiguity about a potential SEC ban on staking.

What to look for with Bitcoin

At the moment, I only foresee a small number of things that could wreck Bitcoin in 2018. One of them has to do with the broader macroeconomic climate. The cryptocurrency may suffer if the economy falters or if inflation increases, as we witnessed in 2022. So pay close attention to monetary policy and the Federal Reserve.

Furthermore, I’m worried about this year’s increased scrutiny of Bitcoin’s energy-intensive mining activities. Although some Bitcoin miners are switching to green energy, the cryptocurrency is still a very energy-inefficient asset. The White House has taken note, and in late 2022 it published a thorough report outlining the detrimental effects that proof-of-work cryptocurrencies like Bitcoin are having on the environment and the power system. Any kind of prohibition on Bitcoin mining would have immediate effects given that the United States is currently the top country for mining Bitcoin.

Having said that, I have a lot of confidence in Bitcoin. I currently think it’s the greatest cryptocurrency to buy. Although the price of Bitcoin may not soar to $1 million this year, it still has the most direct path to significant gains in 2023 of any major cryptocurrency.

Should you invest $1,000 in Bitcoin right now?

It is important to do your own research and make informed decisions based on your personal financial situation and risk tolerance. Cryptocurrencies like Bitcoin are known for their volatility and can experience rapid price changes in a short period of time, which can make them risky investments. It is important to consider factors such as market trends, technical analysis, and other relevant information before making any investment decisions. It is always advisable to consult with a financial advisor before investing any significant amount of money.


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