The crypto market is booming in 2023, and after a tumultuous crypto winter it seems jaw-dropping gains are on the horizon.
Against a backdrop of economic turbulence, an industry-wide pivot East, and rising global commodity prices. Could 2023 see a sensational return to ATH crypto prices?
Read on to discover why these trends are making a fortune for those in the know.
Reason 1.) Crypto Assets Emerging As Effective Hedge Against US Debt Orgy
As the US banking crisis unfolds and the Fed continues on a debt-fuelled spending spree – coined a ‘debt orgy’ by Michael Novogratz.
Investors are racing to find alternative assets to protect their wealth and hedge monetary interventions.
“We have been on a debt orgy, literally, gorging ourselves with cheap money for years,” said Novogratz.
This has led to the increased use of cryptocurrencies as a hedge against the so-called debt orgy.
In a letter to Galaxy Digital Shareholders, CEO Michael Novogratz has praised the resilience of the crypto community.
The thought leader noted that Bitcoin and other digital assets were created for this exact scenario – a breakdown of the legacy financial system.
“Satoshi Nakamoto, way back in 2009, worried about the breakdown of the legacy financial system … Bitcoin really is the first decentralized store of value or money,” added Novogratz.
And indeed, with the fractional reserve banking system facing its biggest storm since 2008 – Bitcoin is exploding back into the mainstream.
With big macro tailwinds expected in 2023, the future looks bright for the crypto market.
Reason 2.) Honk Kong Emerging As Alternative Pro-Crypto Regulatory Regime
Meanwhile, Hong Kong is emerging as a Beijing-backed crypto hub, protecting the industry from potential US crackdowns.
China’s Liaison Office has reportedly become a major presence in Hong Kong’s crypto scene in recent months. With officials rumoured to be building relationships with crypto firms, even going as far as to ask for quarterly reports.
This marks a big shift in attitude, clearing doubts about Beijing’s hard-line stance against digital currencies.
And the bullish climate has led to a wave of crypto businesses migrating from mainland China to Hong Kong. From OKEX to Australia’s Independent Reserve.
With the People’s Bank of China’s governor now giving talks on CBDCs in the city, and major cryptocurrency projects expected to be approved for trading, Hong Kong’s ascent as a crypto powerhouse seems unstoppable.
Reason 3.) Weak Dollar, Rising Commodity Prices, and Self-Sovereign International Finance
The decline of the US dollar is also pushing up commodity prices, as global assets including oils, grains, and gold all emerge as cheaper in non-dollar pegged currencies.
With Bitcoin increasingly emerging as a self-sovereign international financial system following the closure of SWIFT to Russian actor – BTC could be used more and more for commodities settlement. Indeed, Bitcoin mining has long been used in Iran to subvert international oil sanctions – with crude oil burned to power ASIC-centres.
Furthermore, as a finite asset now considered a Commodity Futures Trading Commission (CFTC) asset – Bitcoin has unique protection from the SEC’s regulatory enforcement war.
With the American currency remains under pressure, investors are turning to digital assets as an alternative store of value.
This trend is evident in the rising prices of commodity-related currencies and the increasing interest in cryptocurrency investments.
Bonus Reason 4.) SEC Prioritizing Inter-Agency War Over Regulatory Responsibilities
However, regulatory uncertainty remains a challenge in the crypto industry, as various US agencies grapple with how to classify digital assets.
The SEC’s push to designate all cryptocurrencies as securities highlights inter-agency competition and a focus on fear-driven regulation rather than understanding complex and innovative technologies.
Indeed, government actors will always pursue policies that benefit the organization they represent rather than national or collective interests. This idea, that “where you stand depends on where you sit,” has never been more true for crypto.
“The regulatory regime in the United States is very tough,” Novogratz said in his letter to stakeholders.
“It was making lots of progress until FTX and then the Democrats felt foolish that they were so close to Sam Bankman-Fried — from the SEC to the CFTC to the Biden administration.
“and [now] have used this one example of horrific fraud and being snookered by a guy in Bermuda shorts to just say the whole thing is bad.”
This landscape is likely to change with a new generation of US regulators. A Web3 native generation will usher in a more coherent and supportive environment for the thriving crypto market in response to a rising Eastern crypto industry.
Overall, the explosive growth in crypto prices can be attributed to its role as a hedge against the ‘debt orgy,’ Hong Kong’s rise as a Beijing-backed crypto hub, and the decline of the dollar driving up commodity prices.
These factors, combined with the potential for a more favourable regulatory environment, suggest that there is more bullish action to come in the world of cryptocurrencies.
Don’t be left behind as these trends continue to shape the future of digital assets and the broader financial landscape.
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This article was written for Business 2 Community by Sam Cooling.
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