2021 marked the twelfth year of Bitcoin’s “official” existence, and after halving last year, the year began and went on (mostly) optimistically as many, including me, expected Bitcoin to break through the $ 100,000 mark and go crazy would reach new highs. That wasn’t the case, but Bitcoin had a great year and at times it feels like we are desensitized to important developments in the market.
2021: The year Bitcoin went mainstream
Despite the great strides Bitcoin, its developers, and die-hard users have made over the past 12 years, 2021 was the year Bitcoin really went mainstream. The main event that cemented the endurance and investability of Bitcoin as an asset was, of course, that El Salvador became the first nation to adopt Bitcoin as legal tender and fully embrace the digital asset as its own.
When 2021 began, nobody would have expected an entire country to embrace Bitcoin with open arms, let alone legal tender, and launch a dedicated mobile wallet that the majority of its citizens use or invest in their own Bitcoin reserve. In retrospect, this was an important step that should have had a much greater impact on Bitcoin’s global adoption as well as an increase in price.
That being said, we’ve seen major US politicians masquerading as pro-bitcoin and even going so far as to accept either all or part of their salaries in bitcoin. We were used to athletes doing this, but 2021 really sparked the open interest of politicians in Bitcoin, with Miami Mayor Francis Suarez and Senator Cynthia Lummis making the most of the headlines. But there were many, many others who followed in their footsteps.
Then there were companies that openly adopted Bitcoin as a hedge against fiat instability, especially during the economic fallout from the COVID-19 pandemic. MicroStrategy launched a series of events last year where companies like Tesla, Block, and more kept Bitcoin open. Of course, MicroStrategy continued to stack sats throughout the year and became the largest institutional bitcoin trader in the world.
China’s bitcoin mining exodus temporarily drove bitcoin down, but it has kept the concentration of miners more widespread than before as countries like Kazakhstan, Russia, and the United States see an increase in bitcoin mining operations within their limits. This, of course, has propelled money into towns and counties that have been neglected in the past, and has put in place some favorable regulations to ensure miners don’t move again.
The impact of China’s Bitcoin mining ban and its umpteenth Bitcoin ban was short-lived as the hash rate rebounded within months, ensuring that future efforts by the country to dampen the Bitcoin spirit were little until it would have no impact on either the network or the market. It remains to be seen whether the country will ever accept Bitcoin.
The introduction of Bitcoin in El Salvador has led institutions and politicians built on the archaic fiat system to spread FUD far and wide, from the International Monetary Fund to the Bank of England, and enemies Donald Trump and Hillary Clinton shared one similar view that Bitcoin is a threat to the dollar. This is of course true where fiat currencies were built to depreciate over time, Bitcoin was built to store value and even grow over time.
2022 will be even more explosive for Bitcoin
While Bitcoin may not have hit six-digit numbers (in dollars) this year, it is more than likely that Bitcoin will soar to over $ 100,000 in early 2022 and maybe even hit as high as $ 150,000 or even $ 200,000 later in the year . Of course, Bitcoin could exceed expectations and just go into full swing, but it’s better to be conservative in our expectations.
Aside from a spike in prices, the US and other countries are likely to introduce more favorable regulations for Bitcoin investors, be they individuals or institutions, in the coming year. Regulation is not always bad, it brings market security and opens the pool of willing investors in the market. Countries like the US are unlikely to ban Bitcoin entirely and instead choose to introduce taxes and other measures to capitalize on investor foresight.
Then there is a chance another country or even two countries will follow in El Salvador’s footsteps and adopt the Bitcoin standard in 2022. Of course, it would be great if more countries got on board, but likely institutions like the IMF will do their best to block more countries from adopting Bitcoin. It will be interesting to see who’s next, with emerging markets in South America and Africa being the most likely candidates.
After all, the chances are increasing that a spot ETF will at some point be approved in the US, which can benefit both investors in these funds and current traders. These funds have skyrocketed around the world and the SEC cannot forever approve them, risking capital flight and investor setbacks.
Markets can change dramatically in 2022
The general consensus seems to be growing that the way the market fluctuates can change slightly during the current cycle and subsequent cycles. With more individuals, companies and countries moving into Bitcoin as an investment, there may not be such an overwhelming slump when the current cycle peaks.
It’s hard to forget how Bitcoin was dumped right after previous bull cycles, as the slump in early 2018 after the 2017 bull run is still on everyone’s mind. Since there is a limited supply of Bitcoin and even less traded in the open market on a daily basis, many believe that Bitcoin will peak at some point, but the subsequent decline will not be as severe and the market could recover much faster as investors buy the Dip.
Of course, this makes sense, given the downturn in the past few months, with companies like MicroStrategy and the Salvadoran government piling up some sats of regulation, it’s likely that the market recovery will be much faster.
Whether or not this happens remains to be seen, but in my opinion we will see Bitcoin flourish for most of 2022. Much like 2021 was the year Bitcoin went mainstream, Bitcoin will go beyond the mainstream in 2022 and that’s worth a look forward …
This is a guest post by Dion Guillaume. The opinions expressed are solely their own and do not necessarily reflect those of BTC Inc. or Bitcoin Magazine.