Bitcoin, the first and biggest cryptocurrency, has been a hot topic for over a decade. And it hasn’t been without challenges; in fact, it has been a wild ride, with its price swinging up and down like a pendulum. But despite the volatility of bitcoin, a growing number of people are still very much interested in making use of it. Why the doggedness? You might ask. Some individuals see bitcoin as a way to protect their wealth from inflation; some see it as a futuristic hope for decentralized finance, and some people (actually, most people) just want to make some quick money with bitcoin.
Now, I’m sure you remember the golden days, around November 2021, when bitcoin hit its all-time high price of $65,000. We all went bananas, packed our bags, and were waiting for the bitcoin spaceship to take us to the moon. But then, just a few months later, the price of bitcoin plummeted more than 50%, and most people lost faith again.
So, what do I think? Will Bitcoin ever hit $65,000 again, or do I have to wait for another life (if there’s one)? Is Bitcoin still a good investment, or should I run for dear life? Well, today is Sunday, and it’s surely a good day to put my thoughts into writing. I wouldn’t say I have all the answers, but who knows, you might be able to pick a lesson or two from this.
I don’t mean to drag us back, but I’ll need to first go down memory lane to understand why Bitcoin price spiked to $65,000 in those golden days and what later led to the drop. Then, I’ll analyse what’s happening with Bitcoin currently. Then, I’ll put together the pieces and be able to give a relatively sane response to the main question: Will Bitcoin Ever Get To $65,000 again?.
Subtle note: This is not financial advice, be sure to DYOR.
Firstly, What Factors Led to Bitcoin’s Price Surge to $65,000 in 2021?
The spike in the price of Bitcoin to $65,000 in 2021 was driven by a combination of factors, which includes (but is not limited to): Institutional adoption, market speculation, the rise of NFTs and the bitcoin taproot upgrade. Now, let’s look at them together.
1. Institutional Adoption: Major companies and institutions like Microstrategy, Tesla, and Mastercard announced their support for Bitcoin, which gave bitcoin more mainstream credibility and sparked a surge in the public interest, driving more adoption.
To be more specific, Tesla invested $1.5 billion in Bitcoin in early 2021, and even though they cashed out a few months after (more details later in the article), the initial interest was considered a significant endorsement in the world the cryptocurrencies. Also, in June of 2021, El Salvador, in a historic move, passed a new law to embrace bitcoin as a recognized legal tender, making it the first country to do so.
2. Market Speculation: The 19th of February, 2021, marked a significant milestone for bitcoin as it achieved a market value of $1 trillion for the first time. This event was triggered by the growing support of major institutional investors and noteworthy financial firms, as mentioned above. The fact that big companies were leveraging their balance sheets to purchase bitcoin improved the sentiments relating to cryptocurrency, which had a positive impact on market speculation.
3. The Rise Of NFTs: In as much as the birth of NFTs can be traced as far back as 2014 when Kevin McCoy and Anil Dash created what they named “Quantum“; the sudden uprise of NFTs towards the latter part of 2021 cannot be overlooked. This uprise positively affected the crypto market in 2021 by generating attention and increasing demand and adoption for cryptocurrencies in general.
4. Bitcoin Upgrade: The bitcoin Taproot upgrade, which was highly anticipated, was implemented in November 2021, marking the cryptocurrency’s first significant update in four years (since 2017). This upgrade came with a new feature known as Schnorr Signatures, which greatly enhances the privacy, efficiency, and affordability of Bitcoin transactions.
5. Fear of missing out (FOMO): As Bitcoin was on a steady rise, the fear-and-greed index shifted towards the green side, and as more and more people bought Bitcoin, it created a self-fulfilling prophecy. Seeing others make money from an investment can trigger FOMO. Ans as FOMO led more people to buy in, that drove up the price even further.
I believe it’s safe to conclude that all these factors added up and contributed to Bitcoin’s journey to $65,000 in 2021. So, things were going good; what went wrong, and where?
What Triggered The Subsequent Decline In Bitcoin’s Value In Early 2022?
Just two months after, bitcoin already dropped by roughly 50%.
This mishap can be attributed to a lot of factors, including increased regulatory scrutiny, environmental concerns over Bitcoin mining, and market correction. Additionally, concerns over potential market manipulation, along with a general shift in investor sentiment away from high-risk assets, all contributed to the decline in Bitcoin’s value. Let’s take a surface dive into these factors.
1. Increased Regulatory Scrutiny: With the rise of bitcoin came more eyes from regulatory authorities, which is understandable. Since more people were getting involved, regulatory bodies had to be intentional in order to prevent bad actors from hurting the citizens. Several countries, including China and India, implemented strict regulations on cryptocurrency trading and mining, which took effect after a few months despite being announced earlier. In the United States, the Securities and Exchange Commission (SEC) cracked down on cryptocurrency exchanges, which further added to the overall uncertainty surrounding the industry.
2. Environmental Concern: Then, there came the growing concern over the environmental impact of Bitcoin mining. In the early days of 2022, it was revealed that the energy consumption required to mine Bitcoin increased, which made many investors and environmentalists worry about its impact on the planet. And this is the reason why companies like Tesla decided to pull out. Although I could argue that such a big company would understand the environmental impact of bitcoin mining before choosing to invest in it, but what do I know?
3. Market Correction: The rapid rise in Bitcoin’s price up to $65,000 might have been interesting, but it was unsustainable, and a market correction was overdue. Although, in most cases, a market correction doesn’t have an effect as high as a 50% drop, but we could attribute the impact to the collaboration with other factors on the list.
4. Potential Market Manipulation: There were also concerns that some big players were manipulating the market to their advantage. This fear was amplified by high-profile incidents, such as the decline of the cryptocurrency exchange BitMEX, which further reduced investor confidence.
5. Profit-taking: Finally, many investors who bought Bitcoin during the price hike decided that it was time to sell off, take profits and call it a day.
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Overall, the decline in Bitcoin’s value in early 2022 was caused by a combination of factors, some of which I probably didn’t mention on the list. But I need to remind you that while the cryptocurrency market is notoriously volatile, it’s important to understand that the long-term prospects of Bitcoin remain strong.
The Big Question: Will Bitcoin Ever Go Up To $65,000 Again?
Worthy of note that I cannot predict the future; I wish I could. However, we all understand that the cryptocurrency market is extremely volatile, and it’s not uncommon for crypto coins to experience sharp price movements in either direction.
So if I was to give a definitive response to that question, I would say YES. It can be next month, it can be next year, it can be in ten years, and it can be in twenty; all I can say is that it will happen, and I hope it does, soonest.
To support my motion, here are some expert opinions relating to the question, “will bitcoin ever hit another all-time high?“:
- Dan Roseman of Coinality.com thinks Bitcoin can have a reliable future if the mining process is altered. It could mitigate the losses caused by volatility and bring more stability to the market.
- Ian Balina of Token Metrics believes that Bitcoin can potentially exceed $100K. She believes it’s a new emerging asset that is currently undergoing a correctional phase, and it’s just a matter of time before we resume our journey to the moon.
- Big financial institutions like J.P. Morgan and Bloomberg have also predicted that Bitcoin’s price will exceed $100K. I cannot say for sure why they believe so, but they must have their reasons.
In Conclusion
Bitcoin’s wild ride is far from over. While it’s impossible to predict the future with certainty, a lot of factors are at play that could impact its price. Whether or not Bitcoin ever hits $65,000 again remains to be seen, but one thing is for sure: the cryptocurrency market is constantly changing, and it’s essential to stay updated and make informed decisions when it comes to investing in bitcoin.
As always, do your research, invest responsibly and be sure you’re readily prepared for the moon in case we ever get the chance.
