By Thomas Streissguth
Bitcoin, the original cryptocurrency, is made possible by blockchain technology, a method of generating and tracking digital assets. When Bitcoin is doing well, other cryptos are likely to be doing well. When Bitcoin’s doing poorly, other cryptos are likely also suffering. Nobody, however, seems to agree on the price of Bitcoin in the future.
Why 2021 Was a Good Year for Bitcoin
Over 2021, Bitcoin enjoyed a steep rise in its market value. At the start of the year, a single coin was valued at $32,000, and by April that number had doubled. Traders were optimistic that wider acceptance of Bitcoin by merchants and big banks would support the price.
However, the promise outran the reality — there was still no way to use Bitcoin for much of anything except speculative, risky trading. A decline in the stock market in late 2021, and a fall in highly valued growth stocks, carried cryptocurrencies down as well. Bitcoin finished 2021 at about $47,300.
The Risk-Off Trade
Bitcoin’s price continued to fall in early 2022, as did the stock market. Investors turned to assets that perform well in a time of a slowing economy, higher inflation and rising interest rates.
As cryptocurrency is still widely seen as a risky, speculative asset, this “risk-off” trade brought Bitcoin down to about $36,000 in late February 2022. This represents a loss of nearly half of the value Bitcoin reached at its November 2021 peak of $69,000, though has seen some recovery in late March 2022, at about $47,345.
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