Coming into 2022, there were many predictions by crypto stalwarts and investors as to what the Bitcoin price now will look like. Some experts suggested Bitcoin would hit the $100,000 mark and with good reasons to. However, it’s a different story entirely for Bitcoin.
Since the turn of the year, the coin has lost up to 10% of its value. Compared to the same time last year, the bitcoin price now is just 18% more than what it was in 2021.
Despite the negative start, we expect Bitcoin to rise to new highs in 2022. And it’s not just going to be Bitcoin. The entire cryptocurrency ecosystem is expected to record massive gains as the year advances.
Here are a few key events that will drive the rise in the bitcoin price in 2022.
More nations to make Bitcoin a legal tender
Nayib Bukele and El -Salvador may have paved the way but they won’t remain the only country to make Bitcoin a legal tender. Not in 2022 and here’s why. Reports suggest that Bitcoin can help save up to $400 million in transaction fees during cross-border money transfers. This will help raise the clamor for Bitcoin to become a legal tender. Moreso, with the price of Bitcoin projected to hit the moon in 2022, many will look to join the train particularly in nations where inflation continues to rise, and the U.S. dollar is not a worthy alternative for storing their fund.
Of course, there is the challenge of local appeal and international sanctions to deal with. In El-Salvador for example, despite over 2 million Chivo wallets being in use already (out of 6.5 million inhabitants), many residents are still voicing out against the government for making Bitcoin a legal tender. Also, the International Monetary Fund is mounting pressure on the government by refusing to release a planned loan.
Paraguay, Brazil, Bulgaria, Ukraine, and Afghanistan may be the first countries to follow the precedent.
Stricter regulations to drive Investor confidence
Expect stricter regulatory measures by the government as they struggle to rein in the cryptocurrency market and protect investors. Stable coins and DeFi will be the first point of call but the entire cryptocurrency market will enjoy the scrutiny.
In just the last quarter of 2021 alone, the US government introduced 18 laws. The European Union is also taking major steps with its MiCa legislation and is expected to take effect by the end of 2021.
With the stricter regulations will come increased investor confidence. And as investor confidence grows, mainstream adoption of cryptocurrencies including Bitcoin will increase and further drive the price of Bitcoin upwards due to buying pressure.
More institutional investors to embrace Bitcoin
Tesla’s investment in Bitcoin played a significant role in the upward mobility of the coin’s price. With client demand for Bitcoin and other cryptocurrencies still on the increase, one can expect many more institutional investors to jump in on Bitcoin and other cryptocurrency offerings
In a related comment, Chief executive of Swiss digital asset bank Seba, Guido Buehler, said, “Institutional money will probably drive the price up.” he also noted, “We are working as a fully regulated bank. We have asset pools that are looking for the right time to invest.”
Bitcoin and US Dollar relationship
The bitcoin price now has been influenced by the coin’s relationship with the U.S Dollar. Bitcoin was created to address the challenges of fiat currencies like the U.S Dollar. Likewise, the highest trading pair for bitcoin is the USDT/BTC 9with the USDT pegged to the dollar).
The U.S dollar index in 2021 was one of the reasons many investors turned to Bitcoin. Inflation and low-interest rates meant that investors would seek Bitcoin and the US dollar to have a relationship. This index was trading at $95.95 which is 1% lower than its highest level in 2021
If the DXY index soars, the bitcoin price could come down. Otherwise, the bitcoin price now will be the least it will be in the year 2022.
Dive in but with Care
Whether you believe Bitcoin and other cryptocurrencies are about to shoot for the moon or nosedive, understand that the price will always remain volatile. As such, investment in Bitcoin must always be with care.
Ensure you perform your research t understand the current market situation, the regulations, and whatever other technologies are coming into play. Choose a trusted cryptocurrency exchange and don’t invest money that you can’t afford to lose. This way, even if things go South, you will have all bases covered.