It wasn’t too long ago that crypto analysts were suggesting that Bitcoin could be on course to break the $100,000 milestone before the end of the year. But the cryptocurrency has had a torrid time in recent months and was down to just $45,894 as of today. Bitcoin lost 4% of its value last week, and the last 24 hours has seen the crypto’s price dropping by nearly 1%. So what’s gone wrong for Bitcoin and will things improve in 2022?
December has been an awful month for Bitcoin as its value cannot seem to break out of the $45,000 to $50,000 price band. This was a huge disappointment for crypto investors who had hoped that Bitcoin would bounce back from the slump following the record-breaking highs of $69,000 in November.
It comes at a time when Bitcoin has seen its overall crypto market share put under pressure from a variety of promising alt coins. From celebrity-approved cryptos like Dogecoin to a range of more environmentally-friendly cryptocurrencies, it’s little wonder that Bitcoin is starting to suffer from a drop in enthusiasm.
Recently there has even been concern from the likes of Cornell University academic Eswar Prasad that, ‘Bitcoin itself might not last that much longer.’ Blaming the crypto’s inefficient use of blockchain technology and its negative environmental impact, Bitcoin has suddenly become much less attractive.
Room for optimism
It’s worth noting that Bitcoin isn’t the only cryptocurrency that’s been hit hard by declining investor confidence. Across the board there’s been a drop of between 3% and 7% for other leading cryptos like Ethereum and Cardano, although some cryptocurrencies like Terra and Ripple bucked the trend to post surprising gains last weekend. With approximately $80 billion knocked off the overall market cap of cryptocurrencies, it’s a troubling end to what was expected to be a hugely successful year.
Much of this is simply due to the unstable market conditions. With skyrocketing inflation in the US and beyond, financial legislators are set to introduce monetary policies that make riskier investments such as cryptocurrencies much less attractive than assets like gold and silver. Plus with news that financial institutions such as the Bank of England will be hosting talks with partners to discuss implementing a regulatory framework regarding cryptos, it seems like a pivotal year ahead for the likes of Bitcoin.
Despite the gloomy present circumstances, many investors are confident about Bitcoin’s fortunes. Long range forecasts maintain that the cryptocurrency will double in price before the next market correction. After all, Bitcoin has still managed to enjoy a rise in value of around 60% in 2021.
As such, even the most conservative of estimates have predicted that Bitcoin could reach the $100,000 mark by 2023. The inherent volatility of cryptocurrencies is merely one of the factors that make them such an interesting investment opportunity. But as long as the price rises are sustainable over the long-term, there’s no reason to think that Bitcoin’s current struggles are anything other than just a short-term problem.