Bitcoin (BTC) started its downward trend in 2022 as the value of the token dropped by 70 percent and investors and traders alike began to question the future of the cryptocurrency. While Bitcoin lags behind blockchains like Ethereum and Solana when it comes to utility, it has not been a hedge against inflation. So, will the decline in BTC continue? As we enter 2023, will we see $30,000 in BTC? Here are the developments that may occur in the coming period, according to Travis Hoium, analyst of the US-based finance company The Motley Fool…
Will the upsides of Bitcoin be enough to attract investors in 2023?
Bitcoin has long been touted as a revolutionary new form of money, with its decentralized network and cryptographic security measures that have made it a secure and potentially disruptive force in the financial world. However, over the years it has become increasingly clear that Bitcoin’s true strength lies in its use as a store of value, not as a system of exchange or payment. The security and decentralization of the network are the strongest aspects of Bitcoin, according to the analyst. This is a good option for those who want to save money to protect the value of what they have. However, that may not be enough in 2023, especially as the risk and leverage of major crypto players come to light.
Analyst points to liquidation risk in Bitcoin
Although the use of Bitcoin as a store of value seems positive, it is not without its risks. One of the biggest concerns is that big owners have to sell their Bitcoins. For example, Michael Saylor’s company MicroStrategy has 132,500 Bitcoins as of December 27, with an average purchase price of $30,397 per token. MicroStrategy also has $2.4 billion in debt and its current operations cannot support it. According to the analyst, if Bitcoin drops further, there is a big risk that MicroStrategy will liquidate its tokens.
On the other hand, Grayscale Bitcoin Trust (GBTC) is currently trading well below the net worth of its Bitcoin assets, which faces concerns over Digital Currency Group liquidating BTCs. cryptocoin.com As we have also reported, GBTC trades at a 45% discount to its net asset value. Moreover, this is a gap that has been going on for some time. GBTC sought to change its structure to allow for more liquid trading and potential repayment of trust assets. According to the analyst, this could mean selling Bitcoin. This discount could lead to mass liquidation and a flood of sales in the market, undermining confidence in Bitcoin’s value.
Lack of Bitcoin payments is a major issue
Also, despite the attention it has had over the years, Bitcoin has yet to be widely adopted as a payment system. In contrast, he says other cryptocurrencies like Ethereum and Solana, which have more robust payment ecosystems and native smart contract capabilities, have achieved this. Without a strong foundation as a payment system, it is difficult to see how BTC can maintain its status as a leading cryptocurrency, except for those who simply want to store value. The number of people looking for a digital store of value in an environment of rising interest may also be limited.
Bitcoin is having a tough year: unlikely to hit $30,000
As a result, BTC has had and continues to have a tough time. “I don’t think Bitcoin will hit $30,000 this year and there is definitely a risk of further declines,” the analyst says. He also points out that investors are turning to productive and non-risk assets, such as dividend stocks and bonds. Apart from that, he states that the value of Bitcoin depends more on speculation than anything else. “I think this cryptocurrency will eventually be eclipsed by more innovative competitors, as there is no utility on the blockchain like payments or smart contracts,” the analyst said. He ends his comments with his statements.
