After a miserable 2022, Bitcoin surged nearly 40% in January 2023. This has forced investors to readjust their expectations. According to crypto expert Dominic Basulto, tremendous growth opportunities on a global basis make it a strong long-term cryptocurrency game.
Bitcoin’s comeback in 2023 shouldn’t surprise anyone!
cryptocoin.com After a disastrous 2022 where it lost about 65% of its value, Bitcoin (BTC) got off to a hot start to 2023. In fact, Bitcoin recently showed its best January performance since 2013. This is particularly impressive given that a surprising number of analysts are showing bearish sentiments on Bitcoin’s new year prospects.
While there are many tokens that currently outperform it, Bitcoin is still the best cryptocurrency I can buy today. Bitcoin has a strong track record of bouncing back from years past and I don’t think 2023 will be any different. Here is why.
Growth prospects of leading cryptocurrency Bitcoin
First, Bitcoin’s growth prospects are currently unique. Cathie Wood of Ark Invest recently raised the price target for Bitcoin to $1.48 million (up from $1 million last year). The biggest reason for this was the enormous growth opportunities in eight different market niches of the cryptocurrency. According to Wood, Bitcoin is on pace to account for 10% of an important measure of money supply for emerging markets and 25% of the entire global remittance market by 2030. At the same time, Bitcoin can make up as much as 6.5% of the investment portfolios of large institutional investors.
These updated forecasts for Bitcoin are in line with what we’ve seen in global financial markets. For example, when it comes to emerging markets, Bitcoin continues to make progress as an alternative to fiat currency. At the end of 2022, Brazil introduced comprehensive new crypto legislation, paving the way for Bitcoin to be used as a form of payment and an investment asset. Given that Brazil has the world’s 12th largest economy, it makes sense for Ark Invest to think that cryptocurrency could eventually make up 10% of emerging markets’ M2 money supply.
We also see Bitcoin becoming more of a mainstream risk asset. In January, Goldman Sachs declared Bitcoin as the world’s best-performing investment asset on both an absolute and risk-adjusted basis. In short, given the amount of risk you are willing to take, Bitcoin offers the best value for money. This is in line with what we’re seeing with large institutional investors now seeing cryptocurrency as another risk asset. Last year, Coinbase made waves when it partnered with BlackRock to offer crypto investment services to large institutional investors. This trend is likely to continue in 2023.
What are the risk factors for cryptocurrency?
Of course, there is more to choosing an investment than positive potential. You also have to take risk into account. This is an area where I think Bitcoin really shines. While some cryptos have been caught in the FTX (FTT) meltdown, Bitcoin has emerged largely unscathed. No one blamed Bitcoin for the collapse of the massive cryptocurrency exchange, and no one tried to link it to former FTX founder Sam Bankman-Fried.
And then there’s the issue of regulatory risk. While the Securities and Exchange Commission (SEC) spooked the market by suggesting that even mainstream cryptos like Ethereum (ETH) should be classified as securities, no one is making this argument about Bitcoin. In fact, most analysts agree that Bitcoin may be the only cryptocurrency that should not be regulated by the SEC. And since Bitcoin is still a Proof-of-Work (PoW) cryptocurrency, it is not part of the fear, uncertainty, and suspicion regarding the staking ban by the SEC.
What to expect from Bitcoin?
Currently, I see only a few factors that could derail Bitcoin this year. One of them involves the overall macroeconomic environment. As we saw in 2022, if the economy stalls or inflation rises, the cryptocurrency could pull down. Therefore, it is necessary to closely monitor the Federal Reserve and monetary policy.
I’m also worried that Bitcoin’s energy-intensive mining operations may be under closer scrutiny this year. While some Bitcoin miners are turning to clean energy, the fact remains that cryptocurrency is a largely energy-inefficient asset. The White House recognized this and, in late 2022, released a detailed report showing how PoW cryptocurrencies such as Bitcoin are negatively impacting the environment and the energy grid. Given that the US is currently the #1 country for Bitcoin mining, any Bitcoin mining ban will have immediate consequences.
However, I am extremely optimistic about Bitcoin. My best crypto to buy right now. Bitcoin may not skyrocket to a $1 million price tag this year. But it has the clearest path among the top cryptocurrencies to big gains in 2023.
The opinions in the article are those of the experts and are definitely not investment advice.
