The collapse of the crypto market in 2022 did not spare any digital assets, as its leading digital asset-Bitcoin has fallen massively from its highs of Q4 2021. However, that fall has not changed the status quo of Bitcoin, as it remains the most valuable digital asset in the crypto market. Also, Bitcoin is the most adopted cryptocurrency in the space, with individuals and institutions investing considerable funds in it. Today, large corporations like Tesla, Microstrategy, and Block Inc, are among the many companies that have invested their funds in the crypto asset. At the same time, top brands like Wikipedia, Microsoft, and AT&T are among the many companies already accepting cryptocurrency as payment for goods and services. This is a testament to the digital asset’s growth and widespread global adoption.
Unfortunately, this year, Bitcoin has disappointed investors and traders, as it collapsed from its highs at the beginning of the year and currently hovers around $17K. The majority of the losses have been felt by institutional investors like Elon Musk’s Tesla, who have sold off 75% of the Bitcoin it purchased with $1.5 billion in 2021. Typically, cryptocurrencies are no strangers to uncertainties, as price volatility remains the biggest threat to their adoption. Price volatility is also why some traditional investors opt for alternative assets available on XBitcoin Club instead of cryptocurrencies. The platform has recently launched and there’s a huge interest already, due to its numerous features.
However, before we look at what investors should expect of Bitcoin going forward and examine what may have gone wrong with Bitcoin this year, let’s look at the performance of the largest cryptocurrency by market cap over the years.
A Look At Bitcoin’s Performance Over The Years
Despite being in its relative infancy compared to the U.S stock market, Bitcoin’s performance since its inception has been remarkable. After its pseudonymous creator Satoshi Nakomoto released its white paper in 2009, Bitcoin began trading at $0. The cryptocurrency took its first leap in 2010, trading at $0.09 by July, and increased to around $0.1 by the last quarter of the year. In 2011, the story was quite different as it broke the $1 barrier in April, rose by more than 3,000% in July, and unfortunately closed the year at $2. In 2012, it could not reach the previous year’s highs but closed the year around the $13 mark.
Bitcoin’s rally in 2017, with the help of the media, started to attract many into the crypto market in the following year. Alternatively, 2018 also witnessed the mass minting of many new altcoins, with existing and new investors having plenty of options. Unfortunately, despite hitting $17,527 in January, it closed the year around $3,500. In 2019, Bitcoin could not match the highs of 2017 but managed to close the year at a high of $7,200, despite trading for $3,746 in January.
2021 was a remarkable year for Bitcoin, as the digital asset exceeded the expectation of many investors and crypto analysts. However, one must credit that year’s success to the bull run of 2020. Surprisingly, the harsh economic impact of the covid-19 pandemic stirred fears among many investors, expecting the worst. However, in a twist of fate, that period saw the price of Bitcoin grow astronomically. The digital asset, which started the year at $7,220, grew by at least 400%, closing the year at a record high of $28.935.
In 2021, Bitcoin started the year off the highs of 2020. Then, in February 2021, it hit $50,000 for the first time and skyrocketed to another all-time high of $64,000 in April. The cryptocurrency, amidst market factors, continued to fluctuate in Q3 2021 and, at a point, dropped to $33,0000. However, much to the excitement of investors and the crypto market, it reached another all-time high of $68k in November 2021.
Bitcoin In 2022: Its Fall And The Collapse Of The Crypto Market
Unfortunately, Bitcoin could not sustain the momentum it gathered in late 2021 and fell to around $35,000 in January 2022. Furthermore, it managed to gain in February with an average closing price of $40,812. Unfortunately, it was in June that its plummeting started to worry investors, as its average closing price of $20,108 was a far cry from its average of $31,740 in May 2022.
However, this was just the beginning of the worst to come, as the crypto market started to bleed, with many digital assets plummeting in price by Q2 2022. An Altcoin like Terra LUNA also lost more than 90% of its value in a single week in May. Unfortunately, Ethereum and many others crashed too, capping off a bleeding period for the crypto market.
By July, it appeared that a market correction was in sight, but Bitcoin failed to hold on to its highs at the beginning of the year, as it continued to slump, trading under $20,000 in August. It also fell by 22% in one week in November, capping off a bad performance in Q4 2022. However, while investors hope the digital asset will close the year in an exciting position, Bitcoin is still way off expectations.
What Happened To Bitcoin And Cryptos In 2022
2022 started as a promising year for Bitcoin and the crypto market, as it appeared that they would usurp the decline of December 2021. In Q1 2022, Institutional adoption and investment in cryptocurrency were high, as global brands like Google, Uber, and PayPal expressed interest in receiving cryptocurrencies as payment for goods and services. Institutional investment also saw firms like Michael Saylor’s MicroStrategy buying additional 660 Bitcoins, and the Luna Foundation Guard purchasing 42,410 Bitcoins. One of Brazil’s Mayor- Eduardo Paes, in a revelation to the press, confirmed that he would be investing 1% of his city’s treasury in Bitcoin.
On the other hand, North American country El Salvador, which made history as the first nation to adopt Bitcoin as its official currency in 2021, acquired 410 Bitcoins. That investment took the central American nation’s total stake in Bitcoin to about $375 million. Unfortunately, the country has now accrued over $60 million in losses, as the unstable nature of Bitcoin has slowed its adoption in the nation.
Unfortunately, despite the mass interest Bitcoin generated, especially from institutional investors, the asset is now a shadow of itself. However, it is not alone, as digital assets like Ethereum, LUNA, and many others continue to fall, with the bearish run in full force. This fall has also resulted in the collapse in market capitalization of the top 100 cryptocurrencies from around $2.7 trillion in 2021 to less than $1 trillion today.
When the crypto market decline began, some crypto analysts suggested the war in Ukraine played its part in the deterioration of digital assets in Q1 2022, as investors were dumping them due to the rumors of World War III. In early 2022, there were reports of North American investors pulling funds off the crypto market at an alarming rate, as they were also losing faith. The aftermath of this led to the crash of many cryptocurrencies, not excluding Bitcoin. Furthermore, institutional investors like Tesla, who have now sold 75% of their $1.5 billion worth of Bitcoin purchased in 2021, dumping the asset did not help the cryptocurrency, which has now lost 67% in price value this year.
Lastly, the news of Sam Bankman-Fried’s FTX and FTX.US, who filed for bankruptcy in November 2022, has also yet to help the crypto market. After being unable to meet the high volume of customer withdrawals and being a subject of a hack that drained millions from its customer’s accounts, the exchanges have left many investors in losses. This incident, and many more unfortunate events in 2022, have now contributed to investors losing confidence in Bitcoin and cryptocurrencies. Furthermore, this has now resulted in the decline of digital assets.
Bitcoin in 2023: What Should You Expect?
It is no news that 2022 has not been an excellent year for Bitcoin, as the leading crypto asset has failed to match its prowess and bull run of 2021. As a result, investors have pulled out funds, and many others are losing faith in the cryptocurrency. However, in 2023, there are still optimisms from long-term investors toward the largest cryptocurrency by market cap to exceed expectations.
According to a finance powerhouse- Fidelity Management survey, institutional investment in Bitcoin will likely increase in 2023. This is because in the survey it conducted in 2022, more than 1,000 financial institutions admitted that they would consider buying Bitcoin in the future, with 74% of them considering it in 2023. If and when this happens, it will likely drive the digital asset’s price higher. Alternatively, high institutional demand for Bitcoin has also seen custodial banks and asset managers like Bank of New York Mellon and BlackRock touting the idea of working with crypto exchanges to offer crypto exchange services for their clients.
Bitcoin adoption continues to rise, as many top corporations like Alphabet consider receiving cryptocurrency as payment for goods and services. According to the google parent company, from next year, customers may be able to pay for Google cloud with Bitcoin and other compatible cryptocurrencies. Earlier in the year, fintech giant Mastercard announced it was working on a deal to extend crypto services to traditional banks with crypto firm Paxos. If this partnership succeeds, it will see more adoption and faith in Bitcoin and other cryptocurrencies and improve their value.
Another factor that may improve the fortunes of Bitcoin in 2023 is if the Federal Reserve slows down its hike in interest rate. Recall that, earlier in the year, the Central Bank of the United States, to curb inflation, increased interest rates. That move led to the decline of many crypto assets, including Bitcoin, as investors continued to dump them. However, crypto analysts suggest that, should the Feds ease the interest rates in 2023, investors will buy back crypto assets, and the crypto market’s fortune will improve.
Conclusion
In conclusion, 2022 has been very bad for Bitcoin and many other altcoins, who have struggled to topple their performance in 2021 amidst a host of declining factors. In addition, other events within and outside the crypto space have negatively affected the performance of cryptocurrencies, with many investors recording huge losses.
Fortunately, all hope is not lost, as long-term investors await an imminent bull run. Moreover, 2023 may also not be the worst year for Bitcoin, as many crypto analysts are optimistic that institutional adoption, amidst other factors, will improve its fortune. However, whether that will happen or not, only time will tell.
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Source: https://www.thecoinrepublic.com/2023/01/27/bitcoin-going-forward-a-detailed-projection-of-the-possibilities/