My Crypto Outlook 2022:
Well it is the start of another year so everyone wants to know, "Where is bitcoin headed"? In this article I am going to break down my perspective on whether I think bitcoin will go higher or lower. To give you some perspective this article was written on 1/27/22 and bitcoins current price is: $37,486. We had a dip earlier in the week all the way down to $33,000!
The first thing we need to check is how much the asset has appreciated in the past. Let us start by looking at bitcoin's history. If we go to the 5 year chart we see that bitcoin's price is up +3,949%. That is really good! Now let us lookup bitcoin's 1 year chart. The price is up +22.77%. More modest but still a good gain. We could go longer but bitcoin's price started at $0 so I think 5 years is good enough. That is when mainstream bitcoin adoption really started to occur. Overall, I think bitcoin will continue to appreciate over the long run due to the fact that is has continued to give gains over time.
The next thing we should look at is whether bitcoins supply is limited. If you look at bitcoin's whitepaper you can see that the total number of coins to be mined is 21 million. This means once the bitcoin supply runs out no more can be created. This creates a hard cap on how many bitcoin can exist. This should over time cause the price to go up if more people want to buy the asset. But that is not the only thing that limits how much bitcoin can be bought. Overtime more bitcoin is lost due to people forgetting their private keys or seed phrases. Or sadly people passing away also causes bitcoin to be lost if they don't have anyone that knows that they have the asset, or their family does not know how to access the asset. According to Decrypt.co they estimate over 3.7 million bitcoin to be lost! Which is about 20% of the total minted supply. Having scarcity is a great way for bitcoin's price to increase in value.
Another thing to consider is that bitcoin is gaining global popularity and brand recognition. Currently bitcoin is the highest market cap cryptocurrency with a market cap of $709,215,870,442! And according to ycharts.com there were 255,925 bitcoin transactions today so far! So far one country has adopted Bitcoin as an official currency which is the country of El Salvador. I wouldn't be surprised if another country adopted bitcoin this year. A network is valuable to it's users and bitcoin does have a lot of users!
In conclusion I think bitcoin's price will go up this year due to the fact that bitcoin's price has increased in the past, there is a limited supply and that bitcoin is gaining widespread mass adoption. So I would say I'm bullish on bitcoin for 2022! I think by 2023 the price of bitcoin will close above what it currently is in 2022. These may seem like simple reasons but I'm all about the macro factors!
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This post was written for the #MyCryptoOutlook2022 Writing Contest. It also used the tag #TheGivingBlock to donate 50,000 $SHIB to charity.
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