With BTC hitting another all-time high in October, here are the key reasons behind why mainstream investors are piling in for a 2022 bull market.
Over the summer, Bitcoin experienced a major pullback from its peak in the spring of 2021 of just over US $63K, causing the usual critics to point at its volatility and price declines as signs of the end for the revolutionary cryptocurrency. When it dipped under US $30K in July, the media was full of announcements that Bitcoin was dead.
Factors like China’s ban on Bitcoin mining, which caused an exodus of the world’s biggest mining companies, and rumored new regulations by the US contributed to the dip – but it was also just a natural reaction to an incredible crypto boom over the first part of the year, a condition that usually leads to profit-taking.
While some critics, like Naseem Taleb, claimed that the downturn showed that Bitcoin was worth literally $0 – they forgot the fact that since 2011, Bitcoin’s cumulative gains are more than 20,000,000%. It’s the best performing asset of the last decade by far, with an annual return of 230%. It’s no wonder that people who have never believed in Bitcoin are hoping for its demise.
Those who understand Bitcoin’s value proposition, however, are looking ahead to a boom year. According to Dave Abner, head of development at leading cryptocurrency exchange Gemini, 2021 showed new momentum for the crypto market. “We’ve seen a tremendous amount of inflow of attention, and that’s going to continue to drive the growth of the industry for a while now,” he said in a recent interview.
Corporate adoption is a major part of this trend – earlier this year, Amazon’s employment posting for a “digital currency and blockchain product lead” sparked rumours about the retail giant accepting Bitcoin payments. While the company denied any imminent plans, its clear that a chain reaction of multinationals accepting crypto payments is driving new interest.
“Look at the U.S. dollar, the government can just create new dollars and borrow; it’s like you never have it fixed, like Bitcoin. Bitcoin is mathematics, mathematical purity. There can never be another Bitcoin created.”
– Steve Wozniak, co-founder, Apple
Some experts are moderate with their predictions – Bill Noble, the chief technical analyst at crypto analytics company TokenMetrics, said in an interview that he sees the price of Bitcoin climbing slowly through the end of 2021, and that no large dips are likely in the near term. “I think it’s more likely Bitcoin goes to $75,000 than $25,000,” he said.
Cathie Wood, founder of major BTC and crypto infrastructure investor Ark Invest, was even more bullish – according to her, the flood of institutions and corporations now able to join the market due to the approval of exchange-traded products will cause the price to skyrocket 10x over the next 5 years.
“If we’re right and companies continue to diversify their cash into something like Bitcoin, and institutional investors start allocating 5% of their funds in Bitcoin, we believe the price will be ten-fold what it is today. Instead of $45,000, over $500,000.”
– Cathie Wood, CEO, ARK Invest
Regulations remain a concern, but the approval of exchange-listed products demonstrates how much government engagement works in the crypto market’s favor. With Bitcoin reaching a new all-time high of more than US $67K on October 20th, I’m confident that we’re going to see it hitting new heights throughout the next year.
These are the 5 key trends that I think are driving it forward – all of which are only going to increase in 2022:
- Inflation: Headlines have recently hammered home one of the most critical value propositions for Bitcoin – a way of protecting wealth against the effects of monetary policies like quantitative easing and the inflation of prices for energy and consumer goods. While inflation has been downplayed over the last few years, despite the growing unaffordability of basic needs like housing and food, even the US Federal Reserve has had to acknowledge that this trend will continue well into 2022.
- Adoption: 2021 was the year that Bitcoin truly went mainstream, with dozens of major companies announcing the release of BTC payments solutions, debit cards and other crypto services. This is growing the accessibility and utility of Bitcoin, with companies looking ahead to expanding their products in 2022, like Mastercard’s plans to ensure that any merchant on its global network will be able to accept BTC as payment.
- Access: In October, after years of negotiating with regulators, the first US Bitcoin-based ETF launched on the Nasdaq stock exchange. Trading as BITO, the fund is backed by BTC futures, rather than coins, but opens the crypto market to a new (and huge) class of investors who, like companies and other funds, are often prohibited from direct ownerships. This is predicted to create a massive new demand and greater acceptance among mainstream investors, and lay the groundwork for a number of other Bitcoin products expected to be approved in 2022.
- Oppression: Countries around the world are cracking down on their citizens, especially through financial forms of oppression like restricting access to important forms of support like remittances. While many people lack the ability to connect online, Afghanistan has still been a stunning example of how Bitcoin can be a tool for freedom even in the most totalitarian countries, with women turning to crypto to preserve their access to money in the face of the Taliban’s efforts to cut them out of the financial system. Anonymous and secure, Bitcoin has become the currency of choice for people suffering under corrupt and brutal regimes, from the Middle East to Africa and South America.
- Momentum: It’s hard to understate just how much steam is gathering behind Bitcoin thanks to the above factors, which are each contributing to a record amount of participation in the BTC market. One study by cryptocurrency and blockchain firm TripleA estimates that there are 300 million crypto users across the world, a number that has tripled over the last year, with an incredible adoption speed in the developing world in countries like Nigeria, Vietnam and the Philippines.
While its impossible to predict the future, political, economic and social forces seem to be aligning to make 2022 another break-though period for the world’s first cryptocurrency. As we look ahead to another year of high inflation, repressive crack downs on freedom and a global surge towards freedom from unfair systems, Bitcoin will continue to be the top investment for a freer and more prosperous world – one, in a rare twist, that both major corporate investors and average citizens seem to agree on.
