The Bitcoin crash was driven by a combination of factors: an ongoing drop in prices for digital assets, which has been exacerbated by the Federal Reserve’s plans to remove stimulus from the market; continued concerns over an economic slowdown across China and the U.S.; and fears of new regulations on cryptocurrencies in South Korea, Russia and India.
Even so, investors are still optimistic about the long-term prospects of cryptocurrencies.
“While low prices can drive out weaker hands that seek quick gains rather than investing for the long term, they also help increase visibility for solid projects with genuine potential,”
said David Hanson of blockchain company Sweetbridge.
With the Federal Reserve set to reduce market stimulus, risky assets throughout the world have suffered. Bitcoin, the most popular digital currency, fell more than 12% on Friday and below $36,000 for the first time since July 2021. It has dropped over 45% since its peak in November 2021.
The cryptocurrency market also went down as a result of Russian officials’ plans to prohibit crypto. Russia’s central bank said it would formally regulate all crypto assets by the end of 2022, and several Russian officials called for a complete ban on cryptocurrencies.
“We need to unite globally in order to protect the interests of ordinary people who use these tools,”
said Russia’s Deputy Minister of Finance Alexei Moiseev.
On January 16, 2022, leading investment management company Invesco released a report. The report titled “The Aristotle List: 10 improbable but possible outcomes for 2022” states that bitcoin can slip below $30,000 this year. The report prepared and shared by Invesco’s head of Global Asset Paul Jackson further covers some impossible but probable points:
The prediction is based on assumption that bitcoin has already peaked, by touching $68,000 in 2021 and it will follow a typical financial mania. The report comes with a caveat that last year as well Invesco predicted that bitcoin may slide down to below $10,000 but it didn’t happen. Rather, bitcoin peaked out, hence, the forecast should be taken with a pinch of salt.
Invesco’s report is not the only one that suggests a bubble in the making. Most of the reports from renowned investment institutions suggest one thing: Bitcoin’s days are numbered this year.
The bitcoin market seems to have given birth to a price prediction fairy that shares stories about bitcoin going past $100,000 in a year and even touching a million dollars. It will be interesting to see how these predictions pan out because by now we all know these predictions are nothing but mere speculation.
The new report by Invesco, which was released this week, claims it has no yield and no inherent value to support its price. Bitcoin crashed and already dropped 40%, and it is on the verge of crumbling in a bubble. The cost of one bitcoin rose to nearly $63,000 by mid-May, up from around $9,000 in July 2020.
The price of Bitcoin crashed and fluctuated significantly in recent years, with one bitcoin costing as little as $30,000 in July 2019. The value of a single bitcoin remained below $30,000 from July 2019 until November when it rose to approximately $68,000. When the price of Bitcoin was around $41,500 in the first week of 2022, it traded at $41,661 as of now.
Bitcoin provides no dividends or interest rates, so it has nothing to offer traditional investors who seek yield in an effort to offset inflation. Bitcoin’s price fluctuations may induce rapid drops and dizzying rises, making Bitcoin an unsuitable store of wealth for people seeking income.
In July, Goldman Sachs forecasted that the Bitcoin price would rise. According to Goldman Sachs’ research, bitcoin could climb over $100,000 in five years as digital assets gain traction and replace gold as a by-product of wider adoption. After the Bitcoin scaling problem is resolved, Bitcoin, Bitcoin Cash, and Bitcoin SV may triple their market share.
“Bitcoin may have a variety of uses beyond being a store of value, and digital asset markets are much larger than bitcoin.”
-Goldman Sachs
Bitcoin, in Mike Novogratz’s opinion, will eventually be worth more than its current price. Cryptocurrencies are still in their ‘infancy,’ according to billionaire hedge fund manager Mike Novogratz, and Bitcoin will end up being worth more. In the medium term, Novogratz is unconcerned about the cryptocurrency market.
In an interview with CNBC, he claimed that while the market is in a state of flux over the next few weeks, he isn’t concerned about crypto in long term.
“Some of it goes away as the Federal Reserve becomes more dovish,”
said Novogratz, who has been a long-time Bitcoin bull.
He compared cryptocurrencies to the early days of the internet when it was initially used by tech enthusiasts before expanding to a wider audience. Bitcoin has long been the dominant cryptocurrency, but it now faces competition from Bitcoin Cash and Bitcoin SV as well as smaller rivals Ripple and Litecoin.
BTC’s price could come close to $28,000 before January is out. Analysts predict in the future, as BTC becomes less dominant, its market share will drop. It is projected that as of 2021, Bitcoin’s worldwide dominance will fall as low as 22%. By 2023, this could drop to 16% while Ripple may have a market share of around 14%.
Bitcoin was plummeting at an unprecedented rate at the time of writing this. We’ve seen that Bitcoin has gone through numerous price drops and bitcoin bubbles throughout its existence. Despite the fact that Bitcoin will have ups and downs over time, it is not yet dead; Bitcoin may fall for some time but there are chances that it will rise again!
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