Although Bitcoin hasn’t shown any great leaps in price lately, it had kept investors, neophytes, and the media on their toes in 2021. Since the last year was so tumultuous and exciting for Bitcoin, we decided to list the major highlights for Bitcoin in 2021 and called our article “The Sound and the Fury of Bitcoin”.
The public focus at times seemingly shifts to the BTC adjacent areas such as NFTs, Metaverses, and promising new tokens, Bitcoin remains to be the first digital currency. The past year was record-making for the Bitcoin price and therefore we believe that a closer look at its BTC price history in 2021 will help us in future analysis.
Let’s take a look at the role of the 2021 year in Bitcoin history. In particular, we’ll recall how the price rose and fell, what factors were behind its dynamics, and what to expect in 2022.
With so many factors on all fronts, the fundamental analysis is becoming progressively more complex. But you can still have a solid picture of what was going on as long as you have an understanding of all components influencing the price.
Big picture
As you can see from the graph, 2021 had been a fruitful year overall. The surge of Bitcoin prices from $28,984 to $47,729 was a good leap for the cryptocurrency market.
A 64% growth within one year is an impressive index. The below chart illustrates the cadence of the price change throughout the months:
Analyzing the components of public sentiment around Bitcoin helps to build a more complex viewpoint on its price dynamics.
Trust
It’s no secret that Bitcoin is gaining public trust, with hundreds of millions of users around the world and global A-lister companies adopting the underlying technology and often Bitcoin itself.
What can testify to the value of Bitcoin better than the move of a company like Microstrategy, which collected over $3,660,000 in Bitcoin over the years? The persistence of Michael Saylor in regards to mass purchases of BTC is clearly motivated by objective reasons.
It also became known that holdings of Elon Musk and his projects have a substantial share in Bitcoins. By the end of 2021, Tesla reportedly owned $2 bln in Bitcoin.
The trust of the top entrepreneur in the world is shared by a wider public. According to the survey by Turbotax, 51% of American crypto owners bought their digital currency in the last 12 months.
Market drive
Bitcoin is known for the momentum it creates. This is why it is being called a bubble so often: when someone starts buying, the price goes up and others start to frantically mimic this action. The same happens on its way down. At the peak of such a cycle, Bitcoin reached its all-time high of $68,000 (November 2021) only to lose almost half of its price the next months.
The utterly optimistic take of Antonio Pomiliano, investor and entrepreneur, made headlines once.
Anthony Pompliano, co-founder and partner at Morgan Creek Digital Assets, said bitcoin could hit $500,000 by the end of the decade. “It could eventually reach $1 million per coin”, he added, without giving a timeline.
Market sentiment explains much of Bitcoin’s famous volatility. It created almost unprecedented massive opportunities to capitalize at the top and buy the dip. The ability to react fast has also never been more important: losing is as easy as winning when you trade in large volumes.
Experiment in El Salvador
El Salvador is known for its decision to integrate the U.S. dollar into its payment system. Over time, this experiment was extended to Bitcoin. This way, El Salvador became the first country in the world that make Bitcoin a legal tender.
“El Salvador intends to issue the world’s first sovereign Bitcoin bonds and build Bitcoin City, which will be free of income, property, and capital gains taxes” – the country’s president Nayib Bukele announced in the beach town of Mizata to a crowd of cheering Bitcoin enthusiasts.
Freewallet had covered this decision in detail. Although the International Monetary Fund and regulators warn El Salvador against using bitcoins as an official payment method, it’s clear that other countries and companies might want to join this experiment. At the times of a radical drop of an exchange rate, the damage to private and business finances would be harsh. Reliance on a volatile asset as a major payment tool is able to lead to dramatic consequences. The funds and liquidity assisting the circulation of Bitcoin must be sustainable, well-financed, and reliable. Perhaps, the El-Salvadorian experiment is here to teach us better bitcoin management in the future?
Crypto acceptance
According to Chainalysis findings published at the end of 2021, the number of crypto wallets in the world increased 45% in just 1 year. The “meaningful crypto” movements took place in 159 countries. In 2021, several US banks started accepting bitcoin. The 2021 year started with a $1.5 investment in Bitcoin made by Elon Musk as the Tesla CEO. Next to it, Microstrategy increased a Bitcoin share to its holdings.
Of course, Bitcoin is a massive, if not the overwhelming, part of the total crypto holdings.
Other findings show that Bitcoin as a store of value is still in the early stages of adoption. There is both potential and a gap to overcome before it goes mainstream.
How did Bitcoin’s price perform in 2021?
Overall, 2021 was a remarkable year for cryptocurrency. Many experts regard this year as a crypto breakthrough. Bitcoin’s growth dynamic in 2021 had been very positive, even though there were a few pronounced dips. Suffice to say, the main cryptocurrency doubled its value the past year. The only caveat to this positivity is the price dynamics in early 2022 when Bitcoin got back to its previous levels. Altcoins and utility tokens grew, matching the energy of their main counterparty.
China’s May ban on BTC trading and mining added to pessimistic sentiment but could not affect the further success of Bitcoin’s price.
The price behavior of bitcoin allowed for great investment profits and created investment risks as an extremely volatile asset. At the same time, Bitcoin’s success in 2021 was not enough to turn it into a truly mainstream asset.
Keep track of crypto events with us to learn about the future development of Bitcoin!
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Crypto Highlights of 2021
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