Bitcoin along with other cryptocurrencies has been falling for most of 2022 due to the instability of the cryptocurrency market, where cryptocurrency holders have had to sell their assets due to the continuous price drop. Suddenly bitcoin surged above, $20,000 twice last month and that leads us to this question: will the price of bitcoin increase this year? Before we go ahead and answer this question, there are a few things you need to know.
What is Bitcoin?
Bitcoin was developed in 2009 by Satoshi Nakamoto. Bitcoin is the first and most popular cryptocurrency to enable peer-to-peer exchange of value by using a decentralized protocol and cryptography, to achieve global trade sanctions without intermediaries. It's transactions are kept on a public ledger known as a "blockchain".
Over the decades, the price of bitcoin and its users has increased rapidly, from $300 in 2015 to $19,857 today. Last year, the price of bitcoin fell from $65,000 to $19,000 to this month.
How is Bitcoin valued?
Bitcoin was designed to serve as legal tender to support global transactions without mandatory government action, as bitcoin is a decentralized digital network and not much involved in retail exchanges.
There are many ways to show how bitcoin is valued , but one of the main reason is its scarcity in the crypto market. Since the supply is low, the demand will be higher, the value of bitcoin will increase.
Supply and Demand of Bitcoin
Another theory showing how the value of bitcoin corresponds to the cost of production. Bitcoin is rewarded to people who solve digital math puzzles using a digital device, through a consensus mechanism called Proof of Work (POW) or in other words known as cryptomining. Bitcoin mining requires a lot of electrical energy, which costs cryptominers a lot. In the crypto market, where many competitors are mining bitcoin, the price tends to move towards the cost of production.
Can Bitcoin price increase this year?
Bitcoin price drop from $65,000 in November 2021 last year to $18000 last month September but also increase above $20,000, and other cryptocurrencies to rise more than 6% against the dollar amid growing interest from big investment companies.
This happens when U.S. Federal Reserve (Fed) approved a 0.50% rate hike on May 4th. If Fed were to push the rates hike any further, It will accelerate the purchase of bitcoin and any other cryptocurrencies in forex. However, it's going to devalue non USD currency due to high interest, the local price of bitcoin (USD) grow higher as we saw with the case of Britain.
In November 2021 El Salvador became the first country to accept bitcoin as a legal tender. Also in April 2022, the Central African Republic (CAR) legalize the use of bitcoin and Nigeria despite it's restrictions on the use of crypto, rank number one in Africa in adoptive use of bitcoin, to the point of trend.
Major international companies like Apple and Amazon and have integrated the payment use of Bitcoin and other cryptocurrencies. And many other companies seems to follow them to accept crypto as means of payment.
Russian Central Bank and U.S. Lawmakers draft a bill on use of Bitcoin and other cryptocurrencies. If this were to continue, the price of bitcoin would increase more than expected. Also, the CEO of MicroStrategy, Michael Saylor predicted that bitcoin might rise above $65,000 with the next four years or could even rise above $500,000 this decade, if bitcoin is widely used though out the emerging economy.
Bitcoin will rise this year on even this month but will we be experiencing bounce back occasionally, the cryptomarket is still recovering but will seeing a slight increase in bitcoin and other layer 1 cryptocurrency this year.
