2021 has been a great year for the broader cryptocurrency market in terms of adoption and price action. The prices of most cryptocurrencies have skyrocketed since the start of the year despite the recent downtrend.
Bitcoin adds more than 70% to its value in 2021
2021 is drawing to a close and Bitcoin remains the most dominant cryptocurrency in the world. The value of the cryptocurrency has seen a massive increase in value over the past 52 weeks, outperforming many major financial assets such as gold during this time frame.
Over the past 52 weeks, the price of Bitcoin has increased by 72%. Bitcoin started trading around $ 32,000 per coin in 2021 after surpassing its all-time high in 2017 of $ 20,000 towards the end of 2020. The major cryptocurrency continued its 2020 rally in 2021 and quickly reached a new all-time high above $ 64,000 in April.
The rally came as cryptocurrency adoption continued. The entry of more business entities into the crypto space has helped push the price up. Tesla has started accepting Bitcoin as a payment method for its electric vehicles; MicroStrategy continued to accumulate more bitcoin and El Salvador was preparing a bill to make Bitcoin legal tender.
The increase in adoption by institutional and retail investors has pushed Bitcoin to a new all-time high of $ 64,000. However, starting in May, Bitcoin underperformed until September. The poor performance was mainly caused by China’s ban on cryptocurrency-related activities.
It all started with the ban by the various Chinese provinces of cryptocurrency mining activities. China accounted for the bulk of Bitcoin’s mining hash rate. Therefore, the ban on crypto mining has resulted in a massive drop in the hash rate of Bitcoin mining. Thus, the price of Bitcoin lost more than 50% of its value and fell below the $ 30,000 level in July.
The Chinese government did not stop there. The People’s Bank of China (PBoC) has banned financial institutions and legal entities from engaging in crypto-related transactions. Companies caught processing crypto-related transactions are penalized. This move effectively ended crypto trading activities in the Asian country. So, many cryptocurrency exchanges have ended their services in China. Additionally, companies such as Alibaba and Bitmain have stopped selling crypto mining hardware to Chinese residents.
Elon Musk’s attack on Bitcoin and its massive energy consumption also contributed to the bearish performance. Tesla has abandoned its Bitcoin payment method over environmental concerns over its energy use for mining purposes.
The price of Bitcoin rebounded in September as miners moved to Europe and North America. The mining hash rate began to recover 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 officially make Bitcoin legal in September. Despite warnings from global financial institutions like the IMF, El Salvador’s adoption of Bitcoin is already bearing fruit.
Bitcoin slowly rose to a new all-time high of $ 69,044 in November, with the cryptocurrency’s total market cap hitting a new all-time high of $ 3 trillion. The increased demand for Bitcoin by institutional investors and the entry of more legal entities have helped drive the market up.
However, Bitcoin is currently down almost 30% from its all-time high and is currently trading at around $ 50,000 per coin. The recent poor performance has been attributed to selling pressure in China as stock exchanges shut down operations in the country and Chinese traders sell their bitcoin before losing their money.
What will the market hold in 2022?
2022 is expected to bring further growth to the cryptocurrency market and Bitcoin in particular. Jack Dorsey resigned as CEO of Twitter and changed the name from Square to Block in an effort 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 business development and global expansion for crypto exchange Luno, is confident that the United States will see the first spot Bitcoin exchange-traded fund (ETF) in 2022. He has declared: âThe Bitcoin Futures ETF which was launched this year was widely viewed as unsuitable for retail given the high costs associated with contract renewals, which amount to around 5-10%. Rising pressure / evidenceâ¦ indicates that a Bitcoin Spot ETF will be approved in 2022, mainly because the market is now large and mature enough to support one.
Grayscale has filed 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 in the coming year.
Kate Waltman, a New York-based certified public accountant specializing in crypto, expects Bitcoin to hit $ 100,000 in the first quarter of 2022. âThe most knowledgeable educators in the industry are forecasting $ 100,000 Bitcoin in the first quarter of 2022 or earlier. “ she said.
Bitcoin technical forecast for 2022
Bitcoin’s technical indicators are currently negative due to the coin’s underperformance in recent weeks. The MACD line is still in the bearish zone, 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 over the coming weeks and months as Bitcoin is expected to perform better over the coming year.
By January, the selling pressure from China is expected to end, and like 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’s 2022 forecast, the price of Bitcoin could end 2022 above the $ 80,000 level.
Either way, it would be exciting to see how Bitcoin fares over the coming year.
This article originally appeared on FX Empire