2021 was rich in events: in one country, mining and settlements in cryptocurrency were banned, and in another, Bitcoin became official currency. It is not easy to predict what troubles await us next year, but we can outline the main trends and give a forecast for the bitcoin price.
Bitcoin's ability to recover from anotherwaves of repression by the Chinese authorities only strengthened faith in its viability. The share of Chinese miners in the total computing power in some months reached 60%. Now, according to the University of Cambridge, it is zero. For six months, the cryptocurrency managed to return to the May hash rates, and the price completely updated the historical maximum. China’s move away from mining has served well: Bitcoin has proven its worth and has become more decentralized.
Image Source: Cryptocurrency Exchange StormGain
One of the key trends that allowspositively assessing the prospects for bitcoin in 2022 is the degree of its adoption. The Global Cryptocurrency Adoption Index from Chainalysis, which includes 154 countries, has grown by 881% compared to 2020.
Image source: blog.chainalysis.com
However, the real breakthrough isvesting the official status of Bitcoin in El Salvador - now every store is required to accept cryptocurrency as payment, and the number of crypto wallets from citizens exceeded the number of bank accounts.
Image source: twitter.com/nayibbukele
Even more interesting than ordinary users,bitcoin causes institutional investors. The predicted growth of the cryptocurrency exchange rate attracted “big sharks”: as a result, in 2021 the share of institutional investors with investments from $1 million became a record, exceeding 70%. In October, the SEC approved the first bitcoin futures ETF, reaching $1 billion in just two days.
Image source: BofA Global Research
Bitcoin is better than gold
The main motive of institutional investors isinsurance against inflation caused by the Fed's indefatigable money printing. More than a third of new dollars have been issued since March 2020, and Jerome Powell acknowledged in late November that higher inflation is no longer temporary. Traditionally, gold has been used as insurance. However, even leading banks have recognized that Bitcoin has become its digital counterpart with higher prospects. So, Bank of America notes that over the past six years, bitcoin has been more strongly correlated with inflation than gold.
Image source: BofA Global Research
Course forecast Bitcoin
Unlike 2020, it is now almostno one predicts the collapse of Bitcoin, and such authoritative people as Ray Dalio and Jamie Dimon admitted the fallacy of their initial opinion. In January 2021, we predicted a price in the region of 60k+, since historically Bitcoin goes in multiples of 20k. The statistics confirm this, as the whales sold their stocks every time they reached these round levels.
Therefore, a modest bitcoin price forecast for 2022year is the level of $80,000, and the optimistic one is $100,000. The probability of a deep correction is estimated to be low, since the main risks due to rising global inflation are just beginning to materialize. Much depends on the monetary policy of the central banks, but the high level of public debt will prevent Powell from raising rates as quickly as he dropped them.
Bitcoin is far from the best instrument forcarrying out calculations. But as a store of value due to the highest decentralization and deflationary mechanism, it is highly valued. Due to rising inflation, other developing countries (for example, Zimbabwe) are starting to look towards the introduction of Bitcoin into the payment system; and residents of countries with galloping inflation buy cryptocurrency, despite the obstacles of the authorities (for example, Turkey). These factors will ensure high demand for bitcoin in 2022.
Analytical group StormGain
(platform for trading, exchanging and storing cryptocurrency)