The year 2022 was challenging for Bitcoin investors. However, as an early-stage asset class, its value held up better than anticipated. Future projections indicate that 2023 will be a significant year for Bitcoin. Thanks to greater investment from substantial institutional investors, rising usage by global technology and financial companies, and a more accommodative monetary environment from the Fed, it should be far better than in 2022.
Experts agree that the secret to earning money in stocks is sometimes to ignore your fears and stay the course. Many investors sold their cryptocurrency holdings during the recent crypto winter. This benefitted long-term investors who are confident in Bitcoin’s future.
The leading causes of Bitcoin’s decline were the end of monetary easing and the rise of interest rates. However, the future of Bitcoin may resemble 2021 more than 2022, with an even better year in 2023.
Establishments are Getting Involved
First and foremost, as institutional investors increasingly accept cryptocurrencies as valid asset classes, they are investing in Bitcoin. The Bank of New York Mellon said it would begin providing custodial services for Bitcoin in response to a notable increase in customer demand. 58% of institutional investors purchased cryptocurrencies in the first half of 2022. When polled, 74% said they intend to invest in cryptocurrencies in the future. The increased market presence of these institutional investors, who have far more purchasing power than the typical retail investor, may raise the price of Bitcoin.
Blue Chip Firms are Getting Involved
Since its inception, Bitcoin has been attacked by those who claim that there aren’t many applications, which renders it useless as an investment. The biggest asset manager in the world, BlackRock, said that it will collaborate with cryptocurrency exchange Coinbase to make its Aladdin trading platform available to customers who owned Bitcoin on Coinbase. Mastercard recently announced plans to collaborate with the cryptocurrency firm Paxos. This will help traditional banks offer crypto trading and investing on their platforms. Google parent Alphabet recently announced that it would allow customers to pay for Google Cloud using Bitcoin and various other cryptocurrencies.
Interest Rates Will Decrease
To fight inflation, the Federal Reserve started rapidly raising interest rates in 2022. The rate increases caused the price of many speculative, long-term assets, including Bitcoin and tech stocks, to fall. Many market experts believe that the Fed will ultimately need to reduce these rate rises at some point in the near future after rising interest rates from 0.25% to 0.5% in March to 3.75 to 4%. Investors should feel more at ease reinvesting in assets like Bitcoin if the Fed eases off the gas and allows rates to normalize.