- ИThe highs and lows of Bitcoin
- China’s crisis
- The recovery of mining
- What are the market predictions for 2022?
2021 has been a great year for the development of the crypto market. More and more people start to get interested in the new opportunities, while governments try to come up with ways of crypto regulation.
This year, Bitcoin has remained the world’s leading cryptocurrency. In the last 52 weeks, its value has increased dramatically, surpassing the growth of other strategic assets including gold over the same period.
Over the past 52 weeks, the price of Bitcoin has increased by 65%. In early 2021, the world’s first cryptocurrency traded at about $32,000 after surpassing its 2017 record high of $20,000 in late 2020. This year, BTC continued its rally, and by April it traded at $64,000, reaching its new all-time high.
The price of Bitcoin continued to grow due to the wider adoption of cryptocurrencies around the world, supported by the increased presence of corporate organizations on the crypto market. Tesla resumed accepting Bitcoin as payment for the electric vehicles; MicroStrategy continued adding more bitcoins to its balance sheets, while El Salvador became the first country to make Bitcoin its legal tender.
With more retail and institutional investors adopting Bitcoin, the world’s leading cryptocurrency reached its new record value of $64,000. However, between May and September, the price of Bitcoin went down. It was mainly related to the fact that China banned all cryptocurrency-related transactions.
It started when various Chinese provinces banned crypto mining. Before that, China was the biggest Bitcoin miner in the world, accounting for the majority of the global hash rate. When the authorities banned cryptocurrency mining, Bitcoin’s hash rate reduced drastically. Bitcoin’s price more than halved and dropped below $30,000 in July.
China continued cracking down on Bitcoin when the PBoC banned all cryptocurrency-related transactions and warned financial organizations and corporate entities from engaging in such operations. If the authorities find out that a company engages in cryptocurrency-related transactions, such a company will be subject to sanctions. After that, cryptocurrency trading stopped in China, with crypto exchanges leaving China. Moreover, such companies as Alibaba and Bitmain banned the sale of crypto mining equipment in China.
When Elon Musk criticized Bitcoin and its ‘insane’ energy use, the price continued to decrease. Tesla stopped accepting Bitcoin as payment because of the environmental concerns related to the large amounts of energy it takes to mine Bitcoin.
The price of Bitcoin went up in September when miners moved their equipment to North America and Europe. The recovery of Bitcoin’s mining hash rate was supported by the move of miners and mining farms to other countries including Kazakhstan, the U.S., Canada, and Iran.
This September, El Salvador became the first country to adopt Bitcoin as its legal tender. Although the country was warned by experts of international financial institutions such as the IMF, the adoption of Bitcoin in El Salvador is already paying off.
Bitcoin slowly recovered, reaching two all-time high values in November — the value of $69,044 and the total cryptocurrency market capitalization of $3 trillion. The market continued to grow with the increased demand by institutional investors and the adoption of Bitcoin by more corporate organizations.
Later, however, the price of the first cryptocurrency decreased by almost 30% from its record value and is currently about $50,000. This tendency is related to the sustained selling pressure from China. Crypto exchanges are ending their services in China, and local traders are selling their coins afraid to lose money.
It is expected that 2022 will see further growth of cryptocurrencies, including Bitcoin. Former Twitter CEO Jack Dorsey resigned from his position and changed his company’s name from Square to Block to focus on developing Bitcoin-oriented products.
Experts expect 2022 to be a great year for Bitcoin. According to Vijay Ayyar, VP of corporate development and global expansion at cryptocurrency platform Luno, 2022 will mark the first spot Bitcoin ETF in the United States. “The Bitcoin Futures ETF that launched this year has been widely regarded as not very retail-friendly given the high costs involved of rolling over contracts which amount to around 5-10%. Increasing pressure/evidence… points to a Bitcoin Spot ETF being approved in 2022 mainly because the market is now large and mature enough to support one,” he commented.
Grayscale has filed an application with the U.S. Securities and Exchange Commission (SEC). The company intends to convert its largest Bitcoin Trust (GBTC) to a spot Bitcoin ETF. Many experts believe that the SEC will approve the proposal next year.
Kate Waltman, a CPA licensed in New York with a specialization in cryptocurrencies, is confident that Bitcoin will reach the price of $100k in the first quarter of 2022. “The most knowledgeable educators in the space are predicting $100,000 Bitcoin in Q1 2022 or sooner,” she commented.
Hopefully, these optimistic predictions will come true not only for Bitcoin but also for altcoins. This would mean that cryptocurrencies have become an integral part of the global financial system.