1 best cryptocurrency to buy in 2023

Since the approval of its first operation 14 years ago, Bitcoin (BTC 1.15%) remained the undisputed leader of the cryptocurrency industry, a market now filled with more than 20,000 different tokens. And while it carries a massive market cap of $330 billion today, it has certainly been a polarizing asset to discuss.

But I stay incredibly The rise in Bitcoin. Here’s why it’s the first cryptocurrency Buy in 2023.

Fixed supply

Bitcoin’s defining feature is that it is completely finite, as only 21 million coins can be mined. Unlike most other digital assets, which have supplies that can be fixed by some person or group of people in control, Bitcoin’s supply limit is set in its code and cannot be adjusted without majority consensus, a still-unlikely scenario.

Between now and 2140, new coins will continue to be created, albeit at a slower rate. Every four years, Bitcoin undergoes a “halving” event, in which the reward miners earn for processing transactions and securing the network is cut in half. Over the long term, a supply cap in Bitcoin combined with increased demand and the creation of more fiat currency means upward pressure on its price.

Compare this fixed supply with another commodity, such as gold. Many readers may think that no more gold can be mined, but that is simply wrong. If the demand for physical gold suddenly increased overnight, it would make economic sense for companies to find new ways to extract more of it. Therefore, the supply can increase without any definite limit. This dynamic does not apply to Bitcoin.

Mass addressable market

Different Ethereum, Cardanoor Solanadesigned to allow users to engage in some type of specific use case, such as gaming, non-editable iconsor decentralized finance, Bitcoin has primarily been used solely as a store of value throughout its history.

Although the price of a coin is extremely volatile, it has risen more than 12,400% since April 2013, according to the earliest price data available on coinmarketcap.com. This performance completely exceeds the total returns provided by each S&P 500 or Nasdaq Composite Index. Naysayers love to point out how Bitcoin has failed miserably to be adequate inflation hedge over the past year or so, but what really matters is how it performs over the longer term. From this point of view, it is clear that Bitcoin has been one of the best ways to not only preserve wealth, but also to increase it.

Although the Federal Reserve is taking a tighter monetary stance to prevent rising inflation in 2022, I view this as a temporary measure. The amount of outstanding federal debt has historically been higher not only in absolute terms, but also as a percentage of US gross domestic product. It simply means that our economy needs low interest rates and stimulative policies to continue functioning properly. And that translates into a dollar that will continue to depreciate over time.

Consequently, this naturally makes Bitcoin’s fixed supply cap attractive to individuals, institutional investors, sovereign entities, and corporations seeking an alternative to cash, gold, stocks, bonds, and even real estate to store wealth. This gives Bitcoin a truly game-changing potential, even if only a tiny percentage of the world’s net worth moves into cryptocurrency.

Low entry price

After reaching an all-time high near $69,000 in November 2021, the price of bitcoin has risen 75% in the past 14 months to around $17,000. For readers who are long-term bulls, you should be very excited about this low price because it simply means that you can buy more Bitcoins for the same amount of dollars. However, as I mentioned earlier, you need to be able to stomach the elevated volatility along the way.

Bitcoin has been bought as a risk asset, which means that its price is significantly affected by actions taken by the Fed. If the central bank continues to raise interest rates in 2023, the price of Bitcoin will likely remain under pressure. But if the Fed thinks inflation is under control and decides to leave rates as is or even start cutting rates again, that should be a boon for the Bitcoin price.

But what happens in any given year hardly matters to an asset like Bitcoin, which needs to be held with a time horizon spanning decades. Buying it now could be one of the smartest financial decisions you can make.

Neil Patel has positions in Bitcoin. The Motley Fool owns and recommends positions in Bitcoin, Cardano, Ethereum, and Solana. The Motley Fool has a disclosure policy.

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