Cryptocurrency suffered a rough year in 2022. According to recent estimates, the entire crypto market lost over US$2tn in 12 months, bringing it crashing down from its 2021 highs.
At first glance, cryptocurrency may appear to be an asset that investors should avoid for the foreseeable future, but with declines come opportunities.
Here are some of the reasons why you should make 2023 the year you invest in cryptocurrency.
The crypto winter is at an end
Cryptocurrency has declined so much that it’s inevitable that the “crypto winter” will come to an end in the financial quarters to come. Most analysts expect Bitcoin to test lows of $10k, but few believe it will continue to decline beyond that point.
With Bitcoin mining becoming unprofitable due to soaring energy prices worldwide, this will culminate in the final downswing before Bitcoin becomes profitable again. Expect this to spell the end of the bear market as technology trends swing in favor of blockchain and cryptocurrency.
The bulls are ready to charge
The end of the crypto winter spells a new bull market. Unlike the stock market, the high volatility of the cryptocurrency market means the turnover time is far shorter.
Economists are already predicting lower inflation, easing energy concerns and even a possible ceasefire in the war in Ukraine. Crypto has suffered from a brutal bear market, with many companies imploding or merging with competitors.
The second half of 2023 is expected to see a resurgence in the bull market, with some analysts estimating an increase in Bitcoin prices resulting in end-of-year prices reaching $25k to $30k.
With these depressed prices, now is the time to invest in the best crypto in South Africa.
Tokenization
The tokenization of real-world assets is an exciting new frontier within cryptocurrency markets. Financial institutions are expected to simplify custody and settlement systems to reduce the costs to their customers.
Ethereum, Avalanche, Polygon and Cosmos open-source blockchains are best positioned to support this tokenization drive. If successful, the versatility and usability of cryptocurrency will rise, leading to a massive upsurge in the wider markets.
Digital assets may enter sovereign wealth funds
Sovereign wealth funds are the gold standard for investment assets around the world. An asset that becomes part of a sovereign wealth fund gains instant credibility within mainstream investment markets.
Some countries have already toyed with the idea of incorporating digital assets into their sovereign wealth funds. Saudi Arabia is the most prominent example, with their sovereign wealth fund already mining Bitcoin on a small scale.
Russian government officials have already made it clear they are willing to evade international sanctions by trading in crypto. Sber bank has already integrated blockchain into its MetaMask platform.
It could signal the beginning of a trend that brings entire countries into the world of crypto and the blockchain.
Play-to-earn gaming for crypto
The traditional video gaming industry enjoys millions of customers worldwide, with no signs of slowing down. The next evolution of gaming appears to be incorporating play-to-earn games into their arsenals. Players who purchase these games have the opportunity to be rewarded in the form of cryptocurrency.
It’s a blue water space for growth. For investors looking at cryptocurrency and the blockchain, the gaming industry entering this field can dramatically increase the value of the wider crypto market.
These games already exist on a small scale, with few major gaming developers yet to reveal their plans to enter the market. Industry insiders state that several world-renowned developers are assessing the viability of these games.
Should you invest in cryptocurrency in 2023?
Cryptocurrency investors must evaluate the market on a broader scale. Most investors make the mistake of watching a Bitcoin graph and making a decision based on a gut feeling. Unfortunately, this fails to account for the reasons why prominent cryptocurrencies rise and fall.
Acquiring an understanding of the blockchain technology behind Bitcoin and its potential uses can give you a massive edge over your fellow investor.
The cryptocurrency markets are entirely connected, meaning advancements in one area are likely to impact everything else. With low prices for major cryptocurrencies, now is an excellent time to consider investing some of your portfolio in crypto.
Conclusion
Cryptocurrency is a realm ripe for opportunity. While many investors got caught out by the sudden collapse in prices in 2022, this doesn’t necessarily spell the end.
Smart investors willing to stay in the market and take a risk are well-placed to reap the rewards of their faith in cryptocurrency as an integral part of society moving forward.
What do you think the best-performing coin will be in 2023?