Will its price increase in 2023?

It’s a dark year that has come to an end for cryptocurrencies. In the last 12 months, Bitcoin has lost 62% of its value. Can the trend reverse in 2023?

In November 2013, Bitcoin skyrocketed. Its course reached $1137. A historic record. Then the curves suddenly collapse. A few months later, in January 2015, the queen of cryptocurrencies was just worth it $160a drop from -86%. Bitcoin is dead! trumpeted the press. And after this dazzling leap, cryptos are once again forgotten.

Seen

History repeated itself two years later, in December 2017. Bitcoin was close then 20000 dollars. Some analysts already see it exceeded $100,000. But Bitcoin stops here too. Its price drops -84%. Satoshi Nakamoto’s creation drags an entire ecosystem down with it. And cryptocurrency critics herald their inevitable demise.

But new, Bitcoin surprises. And in November 2021 its price increases towards the 56000 euros, driven by the entry of institutional investors into the market. Morgan Stanley will become the first major American bank to offer its customers exposure to Bitcoin in March 2021. Result? What used to be considered geek gold is suddenly becoming an asset class in its own right.

However, the party does not last. At the end of 2021, prices will go down. And since then the descent into hell has continued, to the rhythm of scandals, hacks and series of bankruptcies. After the capitulation of the debt-crazed Three Arrows Capital fund, then the implosion of the Terra ecosystem and its stablecoin, it’s FTX, the second largest crypto platform, that recently collapsed.

So what does 2023 hold for us? The newspapers that make theirs A At the end of cryptos for the third time in 10 years, will they (finally) be right? Will Bitcoin take the path of insignificance announced by the European Central Bank (ECB)? Or will cryptocurrencies soar to new heights? The reality could be more mixed.

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systemic risk

First focus in 2023: the key interest rates of the central banks. Because in order to contain inflation, the big moneymakers have raised their interest rates over the past 12 months. As a result, Fed rates are now oscillating between 4.25 and 4.50%their highest level since 2007. However, risky assets like the stock market and cryptos fall with each new rate hike.

But the situation cannot last forever. If central banks hike rates too quickly or too high, they risk a recession, explains Nicolas Chron, strategist and stock market analyst. A worst-case scenario that central bankers want to avoid at all costs. Especially as inflation in the United States shows signs of slowing down. She walked off 9% in June 7.1% in November. If the peak of inflation is far behind us, central banks could cut rates as early as mid-2023, which will benefit stock markets and cryptos, believes Nicolas Chron.

However, beyond the economic context, the crypto ecosystem has its own issues to deal with. And fast! Because after the bankruptcy of FTX, several players are now in trouble. This is especially true for the Genesis platform, which has frozen its customers’ payouts. BlockFi, meanwhile, recently placed itself under the protection of Chapter 11 of the US Federal Code, a text designed to protect bankrupt companies.

So should we fear a domino effect? When players like Genesis or Bitgo file for bankruptcy, there is one systemic risk, credits Stanislas de Qunetain, co-founder of Yuzu, a crypto savings account. However, companies go bankrupt every day. This applies to crypto, but also to other sectors. In the short term, this type of event can cause panic in the markets. But that’s not the end of cryptos.

At such times, it’s difficult not to panic and sell at a loss. But the crypto industry is still young. And that kind of crisis is sometimes a necessary evil to give the sector the opportunity to evolve, agrees Margaux Klein, President of the Heritages.io platform. Ultimately, FTX’s fall could lead to more transparency, which will benefit the entire ecosystem.

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To new heights?

So, will the price of bitcoin increase in 2023? Hard to say. Some, like broker BCA, are prophesying a crypto apocalypse at the end of which Bitcoin could fall $5000. Others, however, believe that the worst is over. The on-chain indicators are all pointing in the same direction: the market has bottomed out and we should now be entering an accumulation phase for the “whales”, those investors holding colossal amounts of crypto Stanislas de Qunetain wants to believe.

I see 2023 as a year of transition before bull markets return in 2024, adds Nicolas Chron. Not least because in spring 2024 the rewards for miners on the Bitcoin blockchain will be halved. This event, called the “halving,” occurs every day 210000 blocks minutes, i.e. about every 4 years.

Past performance is not a guide to future performance, says Karl Toussaint du Wast, co-founder of the NetInvestissement platform. But in the past, the supply shock caused by halvings has systematically created a scarcity effect that has sent prices soaring.

For him, the current price levels offer an interesting entry point for investors looking to gain exposure to cryptocurrencies. Provided, however, that you invest consciously. Because far from the imagination of 1000% Profits in a few days, investing in crypto must be part of a long-term vision.

Prices may fall tomorrow. But that’s not what really matters. Because you step into the dawn of a market and bet that the technology within will revolutionize how we relate to money. That takes time, assures Karl Toussaint du Wast.

Our advice? If you want to invest in cryptos, do it gradually to offset the risks associated with high price volatility. Also, be sure to diversify your savings by allocating no more than 5 10% your funds of this asset class. And above all: keep your cryptos safe on a ddi wallet. Don’t leave them on platforms where they are at risk of hacks or bankruptcies.

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