3 Reasons Bitcoin Will Have a Great Revival in 2023

The challenges faced in 2022, make Bitcoin skeptics happy to say “I told you so” and declare that Bitcoin is dead. However, to their dismay, the group finally realized that their victory was premature.

Launching from Bitcoin Magazine, the major crypto is making a comeback in 2023, ending the untimely celebration and making back some of its 2022 losses with a hefty gain of over 60 percent so far.

Here are three reasons behind the rise of Bitcoin in 2023:

1#. The Destruction of the Banking Sector and Reminder of the Value of Bitcoin

In March 2023, unrest in the banking sector due to the collapse of Silicon Valley Bank (SVB) rocked the market with problems it had not experienced since the Great Recession. SVB is not a reckless operation; At that time, Silicon Valley Bank was the sixth largest bank in the United States and the bank of choice for many venture capitalists and startups.

These notorious bankruptcies and the lack of adequate risk management at SVB left many people doubting the safety of their money. Ultimately, the Fed stepped in to protect the bank's customers, but these events still raise questions about the health of the banking system.

While not everyone is flocking to withdraw their money from the bank, many people are now at least aware of the risks of a single point of failure. They started to share their assets across several banks or even diversified into alternatives like Bitcoin and other cryptocurrencies for the first time.

The appeal of a fully decentralized asset like Bitcoin is that there is no CEO or management team who can jeopardize the sustainability of the Bitcoin network by making bad decisions.

Bitcoin users do not need to trust a company or management team to use Bitcoin; instead, they can verify the open source code that governs the Bitcoin network.

Anyone can see every transaction that has ever been made on the Bitcoin block chain, giving the network unparalleled transparency.

Bitcoin prices spiked in March after the meltdown, and in late April, a new issue emerged at First Republic Bank which reported a loss of over US$70 billion in deposits during the previous quarter again pushing up BTC prices.

2#. Global Dedollarization

Aside from the specific problems faced by the banking sector, confidence in the US dollar itself appears to be waning globally.

Bitcoin isn't the only indicator here; Precious metals such as gold and silver saw their prices rise, while the percentage of US dollar reserves held by other countries hit their lowest level in decades.

This percentage decreased from 73 percent in 2001 to 55 percent. 20 years later in 2021, it fell to 47 percent in April 2022, according to economist Stephen Jen.

The yuan is now Russia's most traded currency, while China and Brazil recently reached an agreement to trade in yuan and reals instead of dollars. Meanwhile, Malaysia is working on similar deals with India and China.

Jim O'Neill, the former Goldman Sachs Chief Economist who coined the acronym BRIC, refers to emerging economies Brazil, Russia, India, China and South Africa recently calling on these nations to challenge dollar hegemony by their own new currency.

This ambition may be too far for now. As a commodity importing country, China's economic goals are not aligned with those of commodity exporting countries such as Brazil and Russia. In addition, tensions between China and India call into question the possibility of this cooperation.

Nonetheless, it is another sign towards global dedollarization. It's not just the BRICs that are looking for their alternatives – allies of the United States such as French President Emmanuel Macron recently warned that Europe must reduce its dependence on the US dollar to avoid becoming a "kimbo".

While this does not mean that the dollar's reign as the global reserve currency is certain or coming to an end, it does suggest that individuals and countries are clearly looking for non-dollar alternatives to diversify.

The long-term effects of de-dollarization and the banking crisis on Bitcoin are still being worked out, but this has made more people aware of Bitcoin as a viable alternative to the current system, and has certainly been a driver of Bitcoin's price.

Following the meltdown, the price of Bitcoin rose from less than US$20,000 on March 10, 2023 to over US$30,000 in just over a month on April 13, 2023, experiencing a 50 percent increase and adding US$200 billion to its market capitalization in the process. .

3#. Layer 2 Ecosystem Development

In addition to the rise of Ordinals, Bitcoin has also benefited from further developments in the Layer 2 ecosystem, through projects such as Stacks and the Lightning Network.

Stacks is a Layer 2 companion chain for Bitcoin (BTC) focused smart contracts, enabling the creation of related financial products. Currently, Stacks has a market value of nearly US$1 billion and is close to the top 50 cryptocurrencies by market cap.

The latest update to Stacks allows Stacks users to provide their tokens to secure the network and earn rewards in a similar way to the way networks like Ethereum allow participants to earn rewards by staking their assets.

In this way, Stacks could eventually bring DeFi to Bitcoin.

Apart from Stacks, other Layer 2 Bitcoin protocols such as Lightning are constantly evolving. Lightning focuses on making Bitcoin more scalable.

Recent research from Glassnode found that Lightning is significantly cheaper than using traditional payment processors such as Visa and Mastercard.

Glassnode's James Check found that the cost of sending 1 BTC over the Lightning Network is 3,000 satoshis (the smallest unit of Bitcoin), which is equivalent to a US$0.84 fee to send US$28,000 in dollar terms, or a minuscule fee of 0.0029 percent. .

The Strike payments app uses the Lightning Network to facilitate fee-free transfers from the United States to other countries, including Nigeria, Kenya, and Ghana, and will soon be offered in the Philippines as well.