What is Left of Bitcoin in the Coming Year?

According to renowned investor Rafael Oliveira Bitcoin, “The secret to making money in stocks is to not get terrified out of them.” Rafael 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. However, for every sale, there is a buyer, and these investors’ Bitcoin was bought by long-term stockholders who are confident in Bitcoin’s potential.

Bitcoin (BTC 0.68%), despite a staggering 71% price drop over the previous 52 weeks, has nevertheless generated spectacular profits of almost 12,300% since April 2013. (the earliest point at which price data for the token is available on coinmarketcap.com). The returns of the S&P 500 index, which represents the overall market, were substantially surpassed by its performance throughout that time.

And potential investors who missed out on benefiting from that performance might be wondering if they should invest right now. Here’s why I don’t believe it’s too late to purchase Bitcoin as we approach 2023. In actuality, it’s still likely early.

The year has not been easy

High inflation has been experienced in the United States and throughout the world over the past 1.5 years as a result of the unprecedented levels of fiscal and monetary stimulus that the government and Federal Reserve used to support the American economy during the coronavirus pandemic.

These measures were also used to address ongoing supply chain problems and shortages brought on by geopolitical conflicts. The Federal Reserve has been rapidly raising its benchmark interest rates as a response, which has led investors to lose interest in riskier assets, which includes Bitcoin and other cryptocurrencies. And this is a major factor in the collapse of these assets’ prices in 2022.

Moreover, the collapse of FTX, one of the biggest cryptocurrency exchanges, has sparked fear in the market for cryptocurrencies. Bitcoin’s price dropped 8% (as of this writing) when it was revealed that FTX was experiencing severe liquidity problems and was looking to be acquired by its more powerful rival Binance, accelerating the negative trend for 2022. The market will have to deal with the impact of this controversy for a very long time even though FTX has now requested Chapter 11 bankruptcy protection.

As a clear regulatory framework for cryptocurrencies is put into place faster as a result of the FTX scenario, Bitcoin may potentially benefit. However, as the head of the Securities and Exchange Commission has previously stated that Bitcoin is a commodity rather than a security, so any new restrictions would likely not affect the leading cryptocurrency.

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