Here’s what one of the smartest investors on the planet is saying about Bitcoin right now

Cathie Woods Ark Invest has become known for her love of innovation, and is naturally a fan of it Bitcoin (BTC -1.02%). Each month, a team of Ark analysts explore statistics about the Bitcoin blockchain and other economic trends in an effort to gauge Bitcoin’s overall position in the market and where it may be headed.

This month’s report looked back at February. It was full of valuable information for investors and highlighted why Bitcoin is likely to remain at the top of the cryptocurrency asset class for years to come.

Bitcoin is getting a new feature

Despite pulling back more than 14% in early March, likely due to uncertainty in the crypto landscape as talks of regulation heated up and several crypto-related businesses went bankrupt, Bitcoin has actually had a great start to 2023. Since the beginning of the year, Bitcoin is up almost 50% and seems to be the most resistant since it is one of the most resistant and resistant to regulation. This comes from a combination of its vast decentralization and high levels of security.

After a successful January, the price climbed further in February thanks to a new technology called Ordinals, which was introduced to make the Bitcoin blockchain non-fungible token (NFT) compatible. Before Ordinals, only blockchains with smart contracts could host NFTs.

With the introduction of Ordinals, the average block size of Bitcoin reached a new all-time high. Ark analysts believe this is a bullish sign as they view the limited space in each block as equal to real estate. The smaller the block size available, the more valuable the space becomes as demand increases.

Although still in their infancy, Ordinals could prove to add even more pressure to block space needs. While the launch of Ordinals and a fantastic February was a bit of good news for Bitcoin, it appeared to be short-lived.

A headwind can form

While there is reason to be optimistic about Bitcoin’s future, Ark believes that there are two unknown factors that could dampen its growth – looming regulation and an uncertain macro environment.

As a result of several disasters in 2022, politicians and lawmakers seem to be turning up the heat in the regulatory environment. Just three months into the year, there have been several examples of fines and penalties imposed on crypto-related businesses by the Securities Exchange Commission (SEC).

This is likely due to SEC Chairman Gary Gensler’s belief that a majority of cryptocurrencies are actually securities and therefore fall within the reach of the commission’s jurisdiction.

To start 2023, the SEC has already announced a settlement with cryptocurrency exchange platform Kraken to suspend the betting product. The agency also sent a warning to stablecoin issuer Paxos, which stated that the products also met the criteria for a security and to terminate the offering.

Ark believes that these efforts by the SEC and other government agencies will not pick up until 2023 and could prove detrimental to the majority of cryptocurrencies.

However, it also believes that Bitcoin is different from other cryptocurrencies due to its high levels of decentralization. This opinion has been reaffirmed as Chairman Gensler is on record saying several times that he considers Bitcoin a commodity and therefore beyond the Commission’s control.

In addition to potential regulation, Ark sees the current macroeconomic environment as less than ideal for riskier assets like Bitcoin to grow. Analysts pointed to a handful of metrics such as the velocity of money, trends in spending and patterns in the 10-year Treasury yield as reason to believe that not only riskier assets will continue to struggle, but that a recession may even be on the way.

While it is still unknown whether our worst fears will come to pass, Ark analysts painted a clear picture that in the current financial and regulatory landscape, Bitcoin is the safest option for those looking to invest in cryptocurrency. It reiterated this stance with a number of supporting statistics, such as mining difficulty and long-term holder supply, showing that even in the depths of a bear market, Bitcoin’s blockchain remains relatively healthy.

As the future remains unclear, Bitcoin offers crypto investors a refreshing sense of hope that no matter what happens, it can still continue on its upward trajectory.