How much will a bitcoin or alternative cryptocurrency cost in 2023? Excellent query. Due to several factors with an impact, even experienced traders cannot predict the price of cryptocurrencies. As an investor, however, I want to think about something else. Are those who believe the crypt has already been buried correct, or was the market catastrophe of last year not the end?
Ineffective Bugatti for Bitcoin
The value of bitcoin surpassed $1 trillion for the first time in February 2021. The price of the first cryptocurrency, which increased by 900% in a year, was $54,000 per coin.
Despite the record price, investors did not express any joy. Jack Dorsey, the owner of Square, for instance, later purchased more than 3,000 bitcoins.
Jesse Powell, the creator of the Kraken cryptocurrency exchange, made a surprising prediction in March 2021 amid the soaring price of bitcoin: by the end of 2022, one bitcoin might purchase a Lamborghini, and in 2023, a Bugatti.
The prediction didn’t come true; now, a bitcoin can only be used to purchase a Kia Rio or a Mitsubishi Mirage. And this comes after the meteoric rise of stablecoins, NFTs, ETFs, and DeFi. What went wrong, then?
High interest rates are ended.
The blockchain technology’s growth rates remained high in 2022. As an illustration, the Proof-of-stake algorithm has replaced the Proof-of-work method in the Ethereum protocol. The network will use 99.95% less energy after the update.
The failures of the Terra project, the Voyager Digital and Celsius Network crypto banks, the Three Arrows Capital hedge fund, BlockFi, and FTX exchanges cast a shadow on this event.
In addition, exactly like in the early 1980s, the US had 7% inflation in 2022. The Federal Reserve increased interest rates seven times per year to combat inflation. The base rate is at its highest point in 15 years, ranging between 4.25% and 4.5%.
The value of risky assets, such as stocks and cryptocurrencies, was impacted by Fed policies. Despite an increase in interest rates, riskier assets decline. The cryptocurrency market crashed as a result of this and the failure of significant cryptocurrency initiatives. The arrival of crypto winter, which is marked by a drop in the value of all coins and a protracted bearish trend, has once more been discussed in the media.
However, I don’t think that the decline—the market value has more than half over the past year, from $2 trillion to $800 billion—can put an end to this topic.
Price changes for cryptocurrencies should not be your primary concern. I consider less evident elements to comprehend market potential.
Impact of venture capital
In late 2022, venture capitalist activity sharply declined. Beginners may become alarmed by this information, but let’s carefully examine the report.
How did the date of project entry affect investors’ enthusiasm? Early-stage and seed cryptocurrency firms in 2022 earned higher grants. Young startups are being purchased by investors, indicating that the industry is still in play and that more money will be invested there.
In addition, the market for cryptocurrencies is still expanding. Even if you struggle in school, you can still get into college. Thus, 2022’s failure is not a death sentence but only a period of adjustment.
A new decentralised and tokenized version of the internet called Web3 is built on a blockchain. NFTs and financial applications are also involved. Blockchain games are the most dynamic subset of Web3, nonetheless.
The expansion of distributed ledger-based gaming apps was unaffected by the crypto winter; in 2022, the volume of transactions in these blockchains rose by 94%.
Only a complete global blackout of power will be able to reverse this trend since it is so strong. As a result, the entire blockchain industry will move toward being more practical and less speculative.
Even those who were not involved in business following COVID-19 understood that the worst-hit industries were actively recovering from the crisis. The NFT portion should exactly follow this course.
By 2022, it had dropped by 97%. Unlike the entry of major competitors in this industry, the fall is not a trend. NFTs were introduced by the enormous Starbucks as a part of a loyalty programme. By the end of the year, Reddit, Meta, Nike, Disney, and Coca-Cola had joined the list of large companies that had introduced NFTs.
All of these businesses made investments in creating their own projects based on Web3 and will keep doing so through 2023. It’s only a matter of time before the NFT market recovers, in my opinion, as additional businesses will follow the pattern.
Trend of accumulation
I AM HODLING was the title of a post made by user GameKyuubi on the Bitcointalk forum in December 2013. He lambasted traders who utilise bitcoin as a means of financial gain and contrasted their stance with his own, which is to hold onto the cryptocurrency even when market signals suggest it is necessary to sell the commodity.
The phrase “HODL” went viral, and data used by analytical platforms to gauge the industry’s growth included changes in the number of hodlers.
The accumulation addresses in the Bitcoin blockchain have sharply increased, according to recent figures from Glassnode. In the previous seven years, at least two transactions have been made to these hodler wallets. However, money was never taken out of these addresses.
Nearly 800,000 of these wallets were produced, an increase of 18% over the course of the year. The statistics indicate a rise in the number of devoted service customers.
Hodlers don’t profit from bitcoin. They have faith in its ability to serve as an all-purpose payment method. And the number of users has a big impact on how widely bitcoin is used. While some people diligently amass cryptocurrency, as well as individuals who create blockchain-based ventures, seasonal and annual jumps are unimportant pond ripples, in my opinion. In the depths, the most thrilling events take place.