Is cryptocurrency a good investment in 2023?


Opinions expressed by Entrepreneur contributors are their own.

how much is bitcoins or any altcoin cost in 2023? Excellent question. Even professional traders cannot predict the price of crypto due to multiple impact factors. But as an investor, I want to think about something else. Are those who have already buried the crypt right, or is last year’s stock market crash not the end?

Related: Now that crypto has crashed, what’s next for the metaverse?

Bugatti for bitcoin — failure

In February 2021, the capitalization of bitcoin outmoded $1 trillion for the first time. The first cryptocurrency grew 900% in a year and traded for $54,000 per coin.

Despite the record price, there were no investor releases. For example, the Square payment service, owned by Jack Dorsey, so purchased more than three thousand bitcoins.

Amid bitcoin’s price rise, in March 2021, the founder of the Kraken Cryptocurrency ExchangeJesse Powell caused a stir the forecasts: at the end of 2022, a bitcoin can buy a Lamborghini, and in 2023, a Bugatti.

The prediction failed: today you can only buy a Kia Rio or a Mitsubishi Mirage for one bitcoin. And this is after the boom in ETFs, NFTs, DeFi and stablecoins. So what was wrong?

Related: Everything you need to know about NFTs and cryptocurrency

High interest rates – finished

In 2022, the growth rates of blockchain technology remained high. For example, we have seen the modernization of the Ethereum protocol: now, instead of the Proof-of-work algorithm, the blockchain uses Proof-of-stake. After the change, the network use 99.95% less energy.

However, this event was overshadowed by others – the failures of the Terra project, Voyager Digital and Celsius Network crypto banks, hedge fund Three Arrows Capital, BlockFi and FTX Exchanges.

Moreover, inflation in the United States reached 7% in 2022, just like in the early 1980s. To curb inflation, the The Federal Reserve raised rates seven times a year. The base rate is between 4.25% and 4.5%, the highest mark in 15 years.

Fed policy has affected the value of risky assets, namely stocks and crypto. The dollar strengthens as interest rates rise, but risky assets fall. Due to this and the failure of key crypto projects, the cryptocurrency market crashed. The media started talking about the start of crypto winter — a drop in the cost of all coins and a long downtrend.

But I disagree that due to the fall (over the past year, according to the Coinmarketcap Chartsmarket capitalization has more than halved – from $2 trillion to $800 billion), this segment can be put to rest.

When it comes to crypto, price fluctuations are the last thing you should focus on. I look at less obvious factors to understand the market outlook.

Impact on venture capital

The activity of venture capitalist decreased significantly at the end of 2022. This information may make beginners panic, but let’s read the news more carefully.

How has the timing of project entry changed investor enthusiasm? Startup and Startup Crypto Startups has received bigger checks in 2022. Investors are buying up young startups, which means the game is not over and funds will be pouring into the sector.

Moreover, the cryptocurrency market is only growing. You may fail school but get into college on the first try. The failure of 2022 is therefore not a condemnation, but only growing pains.

Related: Decentralized Venture Capital Will Transform Startup Investing Forever

Web3 development

Web3 is a new decentralized and tokenized incarnation based on the blockchain of the Internet. These are both financial applications and NFT. But the most dynamic segment of Web3 is blockchain games.

The crypto winter has not affected the growth of gaming programs based on distributed ledger technology: in 2022, the number of transactions in gaming blockchains increased by 94%.

It’s a trend so strong that only total blackouts across the planet can bring it down. Thus, the entire blockchain industry will become less speculative and more hands-on.

Return of NFTs

After COVID-19, even people far from business have learned that the most affected sectors have been actively recovering from the crisis. This is precisely what should happen with the NFT segment.

On 2022, it decreases by 97%. But the fall is not a trend — unlike the arrival of big players in this market. NFTs were launched as part of a loyalty program by giant Starbucks. At the end of the year, the list of majors having launched NFTs was replenished with Reddit, Meta, Nike, Disney and Coca-Cola.

All of these companies have invested in developing their own Web3-based projects and will continue to develop them in 2023. I suspect other companies will pick up the trend, so the revival of the NFT market is only a matter of time.

Related: 5 Ways to Maintain and Grow Your Wealth During the Cryptocurrency Downturn

Accumulation trend

In December 2013, on the Bitcointalk forum, a user, GameKyuubi wrote a Publish with a typo in the title – “I AM HODLING”. He criticized traders who use bitcoin to get rich, pitting their position against his – to hold onto the crypto even when market signals indicate the need to get rid of the asset.

The term HODL has become a meme, and the change in the number of hodlers has become the data of analytical platforms to assess the development of the industry.

New Glassnode Stats demonstrate a sharp increase in accumulation addresses in the Bitcoin blockchain. These hodler wallets have received at least two transfers in the last seven years. Yet the funds were never withdrawn from these addresses.

The number of such portfolios reached almost 800,000, increasing by 18% during the year. The numbers show that the number of engaged users of the service is growing.

The Hodlers don’t make money with bitcoin. They believe in its potential as a universal means of payment. And user growth is an important factor in bitcoin’s global adoption. I’m sure that while some are faithfully hoarding crypto and those developing blockchain and blockchain-based projects, seasonal and yearly jumps are just ripples in a pond. The most exciting things happen in the depths.


Leave a Comment