BITCOIN HAD A PRETTY GOOD 2021: The digital currency is UP NEARLY 70% since the start of 2021, GIVING the ENTIRE CRYPTO MARKET a COMBINED VALUE CLOSE to 2 trillion
This year, there was a greater participation of both Wall Street banks and Goldman Sachs. In addition, we came across the first publicly approved traded fund linked to a cryptocurrency in the United States. However, increased regulatory scrutiny and sharp price fluctuations have recently upended bitcoin’s outlook, something that, analysts say, “may send the market headed for a recession.”
Regardless of that, cryptocurrencies are definitely part of the zeitgeist of 2022. Thus, speculators are desperate to understand how Bitcoin will develop, as well as how it will react to the rapidly changing market in 2022. With interest in the widespread cryptocurrencies’ increment, Bitcoin’s rise has been stunted by the rise of rival coins. These are looking to take the top spot from the initial market leader. Bitcoin did not meet the experts’ predictions for the beginning of 2022, and its value fell significantly below the threshold of 100,000 US dollars.
What could influence Bitcoin?
With the cryptocurrency market still in its relative infancy, there is relatively little history on which to base models and predictions. Furthermore, this greatly complicates the task of identifying which socio-political factors could influence this cryptocurrency’s value in the future. That said, there has been a change in the monetary policies of the FED (United States Federal Reserve) that has caused consternation among Bitcoin enthusiasts.
The FED announced that it was closing its bond purchase program quicker, which caused interest rates that had been projected to increase significantly by 2022. This may add pressure to Bitcoin in the short term.
Moreover, one of the developments that cryptocurrency investors are waiting for in 2022 is, among others, the approval of the first US-listed Bitcoin fund. The Securities and Exchange Commission also gave its approval for the launch of ProShares’ Bitcoin Strategy ETF later this year. It is about a product that tracks Bitcoin’s futures contracts rather than giving investors direct exposure to the cryptocurrency.
Futures are financial derivatives that coerce investors to trade assets at a future date and at an agreed price. This, according to experts, could be far risky for inexperienced traders, who usually invest in cryptocurrencies.
What Opinion Do the Experts Have about Bitcoin in 2022?
Many experts say that Bitcoin may suffer a sharp drop in the coming months. The cryptocurrency rose in value to a record price of approximately $69,000 during November. It is currently valued at less than $50,000, 30% less. Wall Street analysts usually define a bear market as one with a drop of 20% or more, according to the near highs. Although it should be noted that Bitcoin is known to be very volatile:
In 2018, Bitcoin fell close to $3,000 after rising to a high of nearly $20,000 a few months earlier. Bitcoin advocates have no worries as new investors continue to enter the market.
They also stress that, as the crypto industry evolves, Bitcoin’s involvement in the market is diminishing. This as cryptocurrencies such as Ethereum begin to play an increasingly important role. This is something that experts are confident will continue to happen throughout 2022, while investors look to profit from the explosion of smaller cryptocurrencies. Many of these emerging projects, such as decentralized finance and organizations, may be the fastest growing sectors in the cryptocurrency space.
On the other hand, regulators (such as China) have put a lot of pressure on cryptocurrencies during 2021. Experts intuit that the issue of regulation will be very important for 2022. Analysts also believe that another important area in which these regulators are will focus during this year is the stablecoin. These tokens, also known as stable coins, are characterized in that their value is linked to that of real assets, such as the US dollar. “Tether” is a particularly controversial stablecoin, as there are concerns about whether it has enough assets in it to justify its peg to the dollar.
Should You Invest in Bitcoin in 2022?
Again, the lack of historical data we have makes this question a tricky one to answer. Nonetheless, many early models have suggested that 2022 may not be as good of a year for bitcoin as 2021 was. Of course, it has not helped at all as there have been wild price swings lately, which always tend to scare off investors. Some analysts are predicting that there could be a steep drop in the value of Bitcoin during early 2022. Perhaps people should be more aware of the market right now, instead of jumping headlong into investing.
However, some experts are more optimistic, suggesting that Bitcoin may hit the $100,000 threshold in the first quarter of 2022. Conservative Bitcoin predictions say that the cryptocurrency will hover near $100,000 by mid-2023. Others are more cautious when pointing out dates and numbers, focusing only on the apparent trend in the increase in value. Assuming that a moderately sustainable long-term increase in the price of Bitcoin is expected, it could be thanks to a natural movement of the market. And with the goal of $100,000 in sight of all.