Despite the crypto markets having witnessed several crises., cryptocurrencies have had a spectacular year. Bitcoin rose from 29K at the beginning of the year to 51K now. The crypto market is now valued at over $2 trillion. As we approach 2022, let’s take a look at what happened in 2021, and what might await us in 2022.
Bitcoin Rose to New Highs
On January 8, thanks to the hot money from institutional investors, the price of bitcoin exceeded $40,000 for the first time. COVID-19 pandemic changed the macro conditions of the economy in 2020, which drove institutional investors to look at bitcoin, an asset with high yield and high potential. Visa and PayPal were some of the companies that adopted bitcoin payment in 2020, and this trend continues well into 2021.
Then in early February, an unexpected announcement sent bitcoin’s price to the moon: Tesla bought $1.5 billion BTC and later accepted BTC payment. By February 21, BTC had soared to more than $57,500, a 96% increase from January 1. In 2021, the number of BTC wallets with balances greater than 0.001 increased by approximately 5.8 million.
Due to the crackdown of the Chinese government and the COVID-19 pandemic, the price of bitcoin crashed several times but soon picked up. On October 15, the long-waited Bitcoin futures ETF was finally approved in the United States. The ProShares Bitcoin Strategy ETF (BITO) saw its trading volume break record, making it one of the largest ETF in history. By October 19, the BTC price exceeded $64,000.
Q4 witnessed the biggest upgrade of Bitcoin in four years: Taproot. Taproot improved the security and privacy of Bitcoin, and laid the foundation for future upgrades. So far, approximately 1600 BTC have been stored in P2TR.
Boosted by NFT and DeFi projects, the price of ETH will also soar in 2021, rising from $715 at the beginning of the year to $4,080 now with an increase of 5.7 times. At the same time, Ethereum underwent the EIP-1559 upgrade, which changed the fee mechanism of the Ethereum network. The Ethereum 2.0 upgrade is expected to complete in 2022, which will boost the whole Ethereum ecosystem.
BTC Rejuvenated Under the Crackdown
With cryptocurrencies attracting much attention globally, governments worldwide expressed concerns for unlawful operations and high risks of crypto. China has taken the most aggressive measures in its ongoing crackdown, including declaring crypto transactions and mining to be illegal in September. However, it shows resilience in the face of challenges. Even though the Chinese government had initiated a total ban on crypto exchange, BTC soared to $68,900 in November. It is believed that BTC has gradually shaken out the influence of the hit by unfavorable events.
Should You Invest in Crypto in 2022?
What’s more, a few weeks ago, Tesla CEO Musk announced that he would accept Dogecoin as a payment currency, which caused Dogecoin to rise by 20% all at once. Tesla may re-accept Bitcoin payments in 2022.
In addition, after Bitcoin became the legal tender of El Salvador, the country has repeatedly purchased Bitcoins, and more Bitcoins may be purchased in the future. According to this trend, more countries may open Bitcoin trading in the future.
2022 will undoubtedly present many challenges and opportunities for the crypto industry. But unlike previous years, it is believed that altcoins such as ETH, Solona and Dogecoin could outperform bitcoin. We can expect more institutional investors and celebrities to join the crypto market, especially in NFTs. Meme coins could also gain a boost from the booming industry. But there is a high chance that the market will continue to be highly volatile, so investors should trade cautiously.
How to Make the Most Profit in a Bullish Trend?
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