Bitcoin price hit a record high in 2021 on support from traditional finance, but crypto experts are struggling to predict next year’s outcome for the volatile sector. With $60,000 more than tripled in value between December 2020 and April, bitcoin has lost some luster in the new year to trade at less than $50,000. “The current choppy and directionless price action and the potential for further downside pressure has created a lot of uncertainty in the digital asset market,” said Lucas Lagoudice, executive director of cryptocurrency investment fund ARK36.
He added, however, that “the continued adoption of digital assets by institutional investors and their further integration into legacy financial systems will be the main drivers of the growth of the crypto space” during 2022.
‘No certainty in crypto’
The rise of bitcoin in 2021 coincided with Wall Street’s growing appetite for cryptocurrency.
The record high in April coincided with the stock market debut of cryptocurrency exchange Coinbase.
October’s peak above $66,000 came after the launch of a bitcoin futures exchange-traded fund (ETF), or type of financial instrument, on the New York Stock Exchange.
Tesla boss Elon Musk helped the market rise and fall with controversial tweets about cryptocurrencies.
El Salvador’s move to make bitcoin legal tender in September also made a mark.
But China’s action on the trading and mining of cryptocurrencies has come under pressure, while bitcoin risks broader regulatory action, as in Europe and the United States.
“There is no certainty in crypto, no matter what,” said Huang Houduk, general counsel for digital asset exchange Bequent.
“While one thing is certain, the voices for cryptocurrency regulation, whether for tighter consumer protection or for clarity on regulations for institutions, are getting louder.”
Created after the 2008 global financial crisis, bitcoin initially promoted a libertarian ideal and aspired to overthrow traditional monetary and financial institutions such as central banks.
In recent days, climate change watchers have harnessed the enormous amount of electricity needed to locate new bitcoin tokens.
more competition
According to some analysts, there is a danger of increased competition, especially from its nearest rival, Ethereum, as Bitcoin enters 2022.
In November, Twitter co-founder and CEO Jack Dorsey announced his departure from the social media platform, leaving him to focus on his digital payments firm as it seeks to expand into cryptocurrency.
For now, bitcoin remains the dominant player.
According to the exclusive site CoinGecko, the total market cap of the cryptocurrency sector is $2.36 trillion, with the total value of bitcoin at $900 billion.
For analyst Frank Downing, “Bitcoin’s reluctance to develop its own design” compared to the likes of Ethereum, is actually “a feature that provides the stability and stability needed to serve as a true global wealth.” “.
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