In 2022 Bitcoin and all the other cryptocurrencies endured a torrid bear market which caused their prices to plummet and triggered the collapse of stalwarts in the sector like FTX, Three Arrows Capital, Celsius, and BlockFi. However, after the BTC price dropped to $16,000 in November 2022, the oldest digital currency has started an ascension and shown signs of recovery since the start of 2023. Bitcoin enthusiasts suggest that the leading cryptocurrency by market cap will witness an uptrend in the following months and encourage investors to turn their attention to the alternative asset once again.
The ecosystem can be confusing for beginner investors exploring cryptocurrencies and Bitcoin for the first time. Bitcoin is a volatile and highly speculative investment, but it brings countless opportunities, and it’s essential for potential investors to understand the project thoroughly before spending their money.
This article talks about the reasons why investors are turning their attention again towards Bitcoin.
Bitcoin adoption is accelerating
Now that the market shows signs of bouncing back, the global adoption of digital currency, and therefore Bitcoin, is accelerating again. Reports show that the number of Bitcoin blockchain users is growing, and the network registers greater fee congestion, which could only signal an increased interest. Considering that more crypto users interact and transact Bitcoin, the digital currency is about to enter a period of accelerated adoption, investor activity, and network improvements.
Bitcoin witnessed a break above its regular transaction counts in the last few weeks.
We should also note that in recent years (despite the crypto winter), more corporations and financial institutions have shown interest in the main digital currencies like Bitcoin and Ethereum, lending reliability and credibility to the projects and fueling the interest among traders. El Salvador made Bitcoin a legal tender in 2022, and several banks are adding cryptocurrency services to their portfolios to meet the fintech needs.
Bitcoin is scarce
While central banks print more money, Bitcoin is heading to its third halving. According to its White Paper, it has a finite supply of 21 million coins, making it a scarce cryptocurrency, which could only attract investors interested in alternative assets. The fact that it’s a limited edition means that even if more challenging times come and its value plummets again, it will most likely rise because scarce assets usually remain at a reasonable price over the years.
Bitcoin’s value suits the present macro climate
Few investors know that Bitcoin was a response to the Global Financial Crisis of 2009. After a series of government bailouts, bank failures, and similar daunting events, the cryptocurrency was introduced into the wild financial sector, and ignored by all investors, except a small group of idealists. Its innovative features gained more popularity over the years, and a decade and a half later, it entered the mainstream. Even if 2022 brings a new financial crisis, other wobbly banks, and growing inflation rates, Bitcoin maintains its strong presence on the market. Finance experts state that the present banking issues are only the result of a slow reaction from the Fed, which should have reacted to inflation at least six months earlier and raised rates more gradually. Their slow reaction has led the sector to a crash, and now they’re printing more money to create deposit liquidity that should prevent a bank-run crisis. Unfortunately, hyperinflation has become a real possibility in this context, and Bitcoin could prove the ideal solution.
Satoshi Nakamoto created Bitcoin as a solution for this kind of scenario. After publishing its White paper, the developers shared their thoughts on traditional money on an internet forum, stating that its main issue is the amount of trust it requires to function. The public must trust the central bank and not the debase of the money. Sadly, the history of traditional currencies shows several cases of breaches in this trust. People should trust their finances to banks, which lend them in waves of credit that lack a reserve.
When central banks engage in quantitative easing, they allow Bitcoin and other hard assets to perform better. Therefore, Bitcoin is expected to win from the present situation.
Bitcoin is a volatile asset
Some would find it strange that investors choose to add Bitcoin to their portfolios because it’s a volatile asset. Seasoned investors prefer assets that register fluctuations in their price because it allows them to make profits. Bitcoin’s price can fluctuate greatly in short periods, creating the potential for high returns. Unfortunately, it also welcomes high risk to one’s portfolio, and investors must be prepared for it. However, it’s an ideal bet for big-ticket market players who afford to wait for its value to rise.
Why should investors buy Bitcoin now?
Considering the above, it’s clear that Bitcoin will be an exciting investment in 2023. Its price could rise substantially in the following months, so those who’re looking for an alternative asset to add to their portfolios should turn their attention toward it. Here are some reasons to put money into Bitcoin:
- Bitcoin is the oldest digital currency
- Bitcoin is built on blockchain, which is a powerful and innovative technology
- Bitcoin’s value has increased dramatically over the years
- Bitcoin is a flexible asset that allows investors to transact money worldwide
- Bitcoin transactions are safe because they’re irreversible and encrypted
- It’s easy to buy and sell Bitcoin because several exchanges allow it
- Bitcoin is a profitable long-term investment
- Bitcoin can be used for multiple purposes, and more companies are accepting it
- Bitcoin facilitates portfolio diversification.
Final words
It’s impossible to predict the future, especially when we’re talking about a volatile asset like Bitcoin, but history proves that Bitcoin maintained its value over time and has great potential. Financial experts think the bear market serves as the perfect opportunity to buy Bitcoin as its value is still accessible.
