In 2022, it will be 10 years since the last major bitcoin crash. Many experts are predicting that there will be another major bitcoin crash in 2022. What do you think? Is this prediction accurate or far-fetched? Let us explain.
Bitcoin is a volatile cryptocurrency surrounded by a history of boom-and-bust cycles. The digital currency has been on a ride over the course of 2021, hitting an all-time high in April before plummeting back down. Bitcoin, and its investors, have been on a rollercoaster ride, rising and falling sharply, influenced by several news stories.
Why will bitcoin crash in 2022?
Bitcoin is surrounded by plenty of Negative stories which have pushed the price of bitcoin down:
- In May, Elon Musk’s comments stating that Tesla would no longer be accepting cryptocurrency payments over concerns about the environment, cause mayhem for Bitcoin.
- Sanctions from the Chinese government on trading and mining bitcoin.
- The block of payments to crypto exchanges by UK bank.
- Donald Trump description of bitcoin as a scam competing against the dollar to take its place as “the currency of the world”.
- The seizing of millions of dollars in bitcoin by FBI agents from criminals.
- UK’s financial watchdog blacklists Binance, which is one of the largest crypto exchanges. Big banks such as HSBC and Santander also climbed on that bandwagon.
- IMF warnings – On countries using cryptocurrencies as legal tender, stating its widespread use would threaten “macroeconomic stability” and could also harm the financial integrity.
- Crypto heist – Crypto hackers, Poly Network, stole $600 million only to return more than a third of it nearly 4 days later in August, claiming that it was “for fun” and to “expose the vulnerability” in the system.
What will happen with Bitcoin in the Future? Rise or Fall?
When assets rise very quickly in price, commonly means a crash is much more likely to occur. Bitcoin took 11 years since its launch to reach $20,000 per coin price. However, it only took three weeks for bitcoin’s price to double from thereon.
A major year for cryptocurrency was 2013. 8 years ago, Bitcoin’s price went from $13.40 at the start of the year to its highest as of then in December of $1,156.10, before it fell back to around $760 three days later.
Fast forward to 2020/21 and the price has soared by more than 700% in 12 months. A single bitcoin reached an all-time high of $63,000 in April 2021. However, it is currently trading at just over $50,000.
As mentioned earlier when assets price raises very quickly, a crash is to be expected to hit sooner or later, or the price falls back down to a more “normal” level. That is bitcoin’s situation right now. Whilst no one can say what the “normal” level is for bitcoin.
Will Bitcoin recover if it does crash?
Cryptocurrencies or any investments for that sake have no guarantee whatsoever. There are no guarantees in investing. As quickly as bitcoin falls, it might just as rapidly climb back up. There are a few concerns surrounding Cryptocurrencies:
- Crackdowns in countries like China
- Calls for greater regulation across the globe
- Environmental concerns
- Its price is heavily based on speculation
- As everything has its fair share of negatives and positives, Cryptocurrencies do too.
- Transformative technology that might revolutionize industries
- Simpler and cheaper transactions, as there’s no “middle man”
- Global trade made easy
- More Confidential Transactions
- As it can’t be printed or seized, it has a safe store of value
- Bitcoin has been lauded as an alternative to gold, meaning it could prove itself as a hedge against inflation
Taking its volatile nature into consideration, bitcoin might gather momentum again at some point in the future. Where would the momentum take it? We just have to wait and watch. If you liked this article, leave a comment below or share it with friends, so they can also know if Bitcoin will crash in 2022.