In the fall of 2021, Bitcoin set a new record. The price of the coin exceeded $68,000. However, the flagship of the cryptocurrency market failed to gain a foothold at the achieved level. Almost immediately, the price began to decline, but no one expected such a steep peak. In the last ten days of January, BTC fell below $34,000 for the first time in seven months and took almost the entire market with it. However, the exchange rate of BTC to ETH and some other digital currencies did not change so radically.
Ups and downs for Bitcoin are quite common, but this time the coin has outdone itself. Pessimistic forecasts sounded in the information space. Cryptocurrency No. 1 was predicted to fall to 20,000 and even 10,000 dollars.
Despite a significant drop in the price, many experts still believe that a new high at around $100,000 is just around the corner. When exactly this will happen is still unclear and opinions differ on this matter.
In early February, BITCOIN began to rise again. However, it should be remembered that the cryptocurrency market is poorly predictable. Digital assets are more sensitive to many market factors compared to traditional assets. It is absolutely possible that both pessimists and optimists will be right at different times of the year.
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What affects the price of Bitcoin?
Cryptocurrencies are a fundamentally new class of assets, yet incomprehensible to the general public. In traditional markets, economic processes have a greater influence. Cryptocurrencies react very violently to a host of additional factors, such as public sentiment, news, scarcity, and less significant events.
The supply of Bitcoin is limited to 21 million coins. To date, more than 18 million BTC have been mined, with some of the coins stored in offline wallets, and some irretrievably lost. The built-in deficit increases the attractiveness of the asset.
Among the factors determining the rise in the price of Bitcoin, the speed of adoption of cryptocurrencies plays a significant role. Cryptotechnologies are conquering minds faster than the Internet at one time. The acceptance of cryptocurrencies as legal tender will only speed up the process and the Bitcoin price will continue to rise.
Attempts to interfere with government agencies in the functioning of cryptocurrencies provoke doubts about digital assets. The market reacts with bearish sentiment, which happened in January.
The Bitcoin network is halving. This term refers to the regular decrease in the reward for the mined block. The reward is halved every 210,000 blocks (approximately every 4 years). This reduces the rate at which new coins come in. Historically, halving times correlate with cycles of rising and falling demand. The last halving took place in May 2020 and the coin has grown steadily since then.
Bitcoin Price Predictions
February is historically one of the most favorable months for Bitcoin. However, February 2022 is the twentieth month after the next halving. August-September 2014 and March 2018 should be considered analogues of the current period. During these periods, the price dynamics was negative.
Other factors may also affect the behavior of the coin, such as the celebration of the New Year in China and the planned publication of a strategy for regulating the digital asset market in the United States. The tightening of regulation or the introduction of any restrictions by the state is highly likely to provoke a fall.
At the same time, it is not excluded that Tesla will resume accepting BTC, and a spot Bitcoin ETF will be approved in the US. This news can give an impetus to the growth of cryptocurrency. The crypto community as a whole is quite optimistic and expects the price to rise to $50,000.
At the same time, experts agree that a period of high volatility should be expected in the short term, while maintaining the overall long-term upward trend.
No matter how events develop in the coming weeks, with Letsexchange.io you will be able to quickly respond to any signal.