Why cryptocurrency investors are reconsidering Bitcoin-buying decisions in 2023

Many investors are reconsidering their decision to purchase Bitcoin in light of the ongoing bear market in cryptocurrencies. However, as any seasoned investor will tell you, Bitcoin’s utility outweighs these transient ups and downs. The best time to buy cheap and hold bitcoin is right now, when its price is slightly over $16,000.

One aspect of Bitcoin is for investment; what about for payment? By 2023, there will be many locations where you can use Bitcoin to make donations or to purchase goods and services.

  • One survey indicated that 74% of institutional investors plan to invest in Bitcoin at some point in the future.
  • Top financial firms and tech companies including Alphabet and Mastercard are getting more involved in crypto.
  • An eventual slowdown in interest rate hikes from the Federal Reserve could be a boon for Bitcoin.

Investors in Bitcoin (BTC 1.15%) were definitely not anticipating a 67% fall year to date after a 59% return in 2020 and a 60% return in 2021.

However, according to renowned investor Peter Lynch, “The secret to making money in stocks is to not get scared out of them.” Lynch was discussing the stock market before cryptocurrencies existed, but his advice is still relevant for cryptocurrency investors today. During the current crypto winter, a lot of investors sold their cryptocurrency holdings, including Bitcoin.

The main causes of Bitcoin’s decline are rising interest rates and the end of monetary easing. However, given a number of recent developments, the future of Bitcoin may resemble 2021 far more than 2022.

Here are three explanations for why the top digital asset could have an even better year in 2023

1. Bitcoin may increase if the Fed eases up on rate increases.

In an effort to fight inflation, the Federal Reserve started aggressively raising interest rates in 2022. The results of this policy have not yet been made clear. The rate increases did succeed in causing the price of many speculative, long-term assets, including Bitcoin and tech stocks, to fall.

Many market experts believe that the Fed will eventually need to reduce these rate hikes 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 returning to assets like bonds if the Fed eases off on the gas and allows rates to normalize.

2. Blue chip companies are interested

Major tech and financial enterprises are increasingly using Bitcoin at the same time. Since its inception, Bitcoin has been attacked by those who claim that there aren’t many applications for it, which renders it useless as an investment.

That is fast beginning to change. While Mastercard (MA 4.69%) recently announced plans to collaborate with cryptocurrency firm Paxos to help traditional banks offer crypto trading and investing on their platforms, Google parent Alphabet (GOOG 1.60%) (GOOGL 1.32%) recently announced that it would let customers pay for Google Cloud using Bitcoin as well as a number of other cryptocurrencies.

3. Institutions are taking over

First and foremost, as institutional investors increasingly accept cryptocurrencies as valid asset classes, they are investing in Bitcoin, the biggest and most widely available (market valuation of $300 billion).

58% of institutional investors questioned purchased cryptocurrencies in the first half of 2022, according to the annual Fidelity Digital Assets study, which was performed by financial behemoth Fidelity management. In addition, 74% of respondents said they intended to invest in cryptocurrencies in the future. Fidelity questioned 1,052 institutional money managers from across North America, Europe, and Asia, so this wasn’t a small sample size either.

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