2021 has been an excellent year for the crypto market in general in terms of adoption and price action. The prices of most cryptocurrencies have skyrocketed since the beginning of the year despite the recent downtrend.
Bitcoin adds more than 70% to its value in 2021
2021 is coming to an end and Bitcoin it is still the most dominant cryptocurrency in the world. The value of the cryptocurrency has seen a massive increase in value in the last 52 weeks, outperforming numerous major financial assets such as gold during that period.
In the past 52 weeks, the price of Bitcoin has risen 72%. Bitcoin began trading in 2021 around $ 32k per coin after it surpassed its 2017 all-time high of $ 20,000 towards the end of 2020. The leading cryptocurrency continued its 2020 rally in 2021 and quickly reached a new all-time high above $ 64k in April.
The rally came as crypto adoption continued. The entry of more corporate entities into the crypto space helped drive up the price. Tesla started accepting Bitcoin as a means of payment for your electric vehicles; MicroStrategy continued to accumulate more bitcoins, and El Salvador was preparing a bill to convert Bitcoin into legal tender.
Increased adoption by institutional and retail investors led Bitcoin to a new all-time high of $ 64k. However, as of May, Bitcoin underperformed until September. The poor performance was mainly due to China's ban on cryptocurrency-related activities.
It began with the various provinces of China banno cryptocurrency mining activities. China accounted for the majority of Bitcoin's mining hash rate. Thus, the cryptocurrency mining ban resulted in a massive decrease in the hash rate of Bitcoin mining. Hence, the price of Bitcoin loses more than 50% of its value and falls below the $ 30k level in July.
The Chinese government did not stop there. People's Bank of China (PBoC) banned financial institutions and corporate entities from engaging in crypto-related transactions. Businesses caught processing crypto-related transactions are penalized. This move effectively put an end to cryptocurrency trading activities in the Asian country. Therefore, resulting in numerous cryptocurrency exchanges ending their services in China. Also, companies like Alibaba and Bitmain stopped selling crypto mining hardware to Chinese residents.
Elon Musk's attack on Bitcoin and its massive use of energy also contributed to the bearish performance. Tesla discontinued its Bitcoin payment method due to environmental concerns about its use of energy for mining purposes.
The price of Bitcoin rebounded in September as miners moved to Europe and North America. The mining hash rate began to rebound as mining farms and other individual miners found new homes in countries such as the United States, Kazakhstan, Iran, Canada, and several others.
El Salvador became the first country in the world to make Bitcoin officially legal tender in September. Despite warnings from global financial institutions like the IMF, the adoption of Bitcoin in El Salvador is already paying off.
Bitcoin slowly rose to reach a new all-time high of $ 69,044 in November, with the total cryptocurrency market capitalization hitting a new all-time high of $ 3 trillion. Increased demand for Bitcoin from institutional investors and the entry of more corporate entities helped drive the market higher.
However, Bitcoin is currently down almost 30% from its all-time high and is trading around $ 50k per coin right now. The recent poor performance has been attributed to selling pressure in China as exchanges shut down their operations in the country and Chinese merchants are selling their bitcoins before losing their money.
What will the market hold in 2022?
2022 is expected to bring further growth to the cryptocurrency market and to Bitcoin in particular. Jack Dorsey resigned from his position as CEO of Twitter and changed the name from Square to Block in an attempt to focus on developing Bitcoin-centric products.
Market experts are optimistic that 2022 will be a better year for Bitcoin. Vijay Ayyar, vice president of corporate development and global expansion at crypto exchange Luno, is confident the United States will see Bitcoin's first exchange-traded fund (ETF) in 2022. He said: โThe Bitcoin Futures ETF that launched this year has been widely viewed as unfriendly for retail given the high costs involved in renewing contracts amounting to around 5-10%. Increasing pressure / evidence ... points to the approval of a Bitcoin spot ETF in 2022, primarily because the market is now large and mature enough to support one. "
Grayscale has submitted an application to convert its Grayscale Bitcoin Trust (GBTC) into a spot Bitcoin ETF, and many are optimistic that the SEC will approve at least one proposal next year.
Kate Waltman, a New York-based certified public accountant who specializes in crypto, expects Bitcoin to hit $ 100,000 in the first quarter of 2022. "The most savvy educators in the space predict $ 100,000 Bitcoin in the first quarter of 2022 or earlier", she said.
Bitcoin technical forecast for 2022
Bitcoin technical indicators are negative at the moment due to the poor performance of the coin in recent weeks. The MACD line It is still within the bearish region, while the RSI of 46 shows that Bitcoin is facing selling pressure in the market.
However, long-term indicators show that Bitcoin is performing well. BTC is trading above its 200-day simple moving average at $ 47,272. Technical indicators could improve in the coming weeks and months as Bitcoin is expected to perform better next year.
By January, the selling pressure from China is expected to end and similar to the mining hash rate, the price of Bitcoin could rise. Once that happens, the MACD and RSI will be back in the positive region. According to WalletInvestor forecast for 2022, Bitcoin price could end up in 2022 trading above the $ 80k level.
Regardless, it would be exciting to see how Bitcoin performs over the next year.
Is Article was originally published on FX Empire
