Two separate reports published in the American magazine "Forbes" shed light on the reasons for the great collapse of the most famous digital currency "Bitcoin" last year, and reviewed the prospects for the digital currency market in the year 2023 and what investors should do.
The first report by writer Rashi Maheshwari said that the "Bitcoin" currency witnessed a major collapse over the past year, which left crypto investors with great disappointment and uncertainty about the future of their investments in this regard.
The report indicated that “Bitcoin” (the most famous digital currency) was subjected to tremendous pressure that led to its decline, so that the value of one of them is now about $ 17,000, compared to what it was in November 2021, when it reached $ 69,000, to take a downward path since that time. With him, he expected her to recover again.
What happens to bitcoin?
The writer said that 2022 was a tumultuous year for “bitcoin”, which was unable to deal with market pressure, especially after the collapse of the “FTX” cryptocurrency exchange, as it no longer showed any real signs of recovery, in addition to the high price of bitcoin. Interest and inflation fears also played a huge role in the collapse of crypto prices.
She added that bitcoin - after the resounding fall in November 2022 - fluctuated between 16 thousand and 18 thousand dollars, recording a decrease of approximately 80% since the significant rise it witnessed in November 2021.
The author stated that experts believe that bitcoin is about to reach the bottom of the drop zone soon, while others feel that it will continue down the path for a longer period.
What is the reason behind Bitcoin's decline in 2022?
The author reviewed some of the reasons for the decline in the price of Bitcoin over the past year, including:
Russian-Ukrainian war.
Higher inflationary fears, which means more expenditures on the cost of living.
Uncertainty due to higher interest rates in the US and UK.
Cryptocurrency trading criminalized in China.
New tax system in India.
The collapse of the Terra Luna coin.
The collapse of FTX, the world's largest cryptocurrency exchange.
The writer explained that these "unexpected and unfortunate" events led to severe selling, as panic dominated the markets, in addition to having also played a major role in disturbing the investor's mood.
What does the collapse of bitcoin mean for crypto investors?
The writer said that bitcoin is considered one of the most preferred cryptocurrencies for many investors, as it was promoted as an alternative to gold, which means that it can prove itself as a protection against inflation, and it was also able to gain widespread acceptance as an acceptable payment method just like currencies. leafy.
And the author stated that digital assets are characterized by their very volatile nature, indicating that this means that the price of Bitcoin depends only on speculation among investors.
Given this volatile nature - the author says - market experts are confident that bitcoin will recover, and that its prices will rise again at some point in the future.
What should I know before investing in digital currencies?
The author reviewed a number of tips that must be known before investing in Bitcoin and its sisters, including:
Do not invest all your savings, as it is sufficient to invest only 5 to 10% of your total portfolio in cryptocurrencies such as Bitcoin so that you can bear the loss if it occurs.
Treat cryptocurrency as a long-term investment, like other traditional assets.
Understand the volatile nature of Bitcoin and then make an investment decision.
Accurately research the best time to buy or sell bitcoin to maximize returns.
Digital currencies .. expectations for 2023
Forbes magazine published another report on the crisis of digital currencies, especially Bitcoin.
The report indicated that what happened last year did not weaken investor sentiment about Bitcoin, as many hope that it will return to strong performance in 2023 and compensate for its losses, while others expect more collapse, so that some say that this currency will disappear forever.
The site reviewed many predictions for the price of bitcoin in the new year, and these expectations ranged from great optimism to extreme despair.
optimists
Tim Draper, an investor and crypto supporter, has long predicted that the Bitcoin price will reach $250,000 in mid-2023.
The report quoted Carol Alexander, a professor of finance at the University of Sussex, as expecting an increase in the price of bitcoin in the first half of 2023, to reach $50,000 at the end of the year, which is what many traders consider the closest to happen.
Investor Alistair Milne predicted that the price of Bitcoin would rise to $45,000 depending on what happens with inflation.
CIO of the cryptocurrency hedge fund Eric Wall also predicted that the bitcoin price would exceed $30,000.
pessimists
Billionaire Mark Mobius, founder of Mobius Capital Partners, predicted in early December that Bitcoin would drop further and reach a low of $10,000 in 2023, due to the tightening of monetary policy by the US Federal Reserve and the high price of Bitcoin. Benefit.
The head of digital asset research at investment firm VanEck Matthew Siegel said the first quarter of 2023 will see bitcoin reach a price between $12,000 and $10,000, citing rising energy prices and a lawsuit by financial transaction firm Ripple. Digital v. Securities and Exchange Commission will be two major factors in the continued decline.
“More cryptocurrency companies and exchanges are finding that they do not have enough liquidity, which leads to more bankruptcies and a collapse of investor confidence in the asset,” said Standard Chartered consumer bank. digital".
What should crypto investors do?
Even with such wildly different expectations, what should crypto investors do?
He replied that diversification is an option, but it does not offer the same benefits as in the traditional investment markets, and diversification only changes the amount of volatility and changes in your portfolio, but when bitcoin is the least volatile asset that you own, you know it will be a bumpy ride no matter what happens.