Thursday, September 21

Bitcoin loses steam after a year of records

After breaking the psychological level of $ 50,000 on Christmas Eve, bitcoin has deflated during the last week of the year that instead of bringing the long-awaited rally of Santa Claus of the cryptocurrency, at the moment it leaves losses of more than 6 percent that represent a small blur to a year of records.

The reference cryptocurrency in the market has fallen from $ 51,888 that marked on Monday to $ 47,300 in which it has moved throughout Thursday, anticipating a negative weekend that, by expanding the focus to the entire previous month, marks a decline of more than 16 percent.

A last month in the red that, however, does not detract from the absolute performance of the cryptocurrency, which began the year 2021 trading at $ 29,388 and now, with one day remaining to finalize the annual calendar, is moving around 47,300 Dollars.

The bitcoin, therefore, it registers year-on-year increases slightly above 60 percent that, without a doubt, will have benefited those investors who a year ago decided to bet on long-term assets, fleeing from the short-term volatility that characterizes the cryptocurrency market. .

An increasingly heterogeneous market

After a year in which all-time highs have been registered, the market is asking the forced question of what to expect from bitcoin for 2022.

In this sense, it seems clear that more and more traditional investors are opening their doors to introduce cryptocurrencies into their portfolio of assets, despite recent setbacks in the form of the SEC’s refusal of proposals to launch an ETF by Valkyrie Investments y Kryptoin.

A few months earlier, however, the first bitcoin futures exchange-traded fund (ETF), Proshares Bitcoin Strategy moved close to 1 billion dollars on its first day in Wall Street, and both the United States and the European Union have advanced laws that seek to clearly regulate the cryptocurrency market in the immediate future.

This greater acceptance of bitcoin can be seen, for example, in the study of market movements in 2021 of Schroders who notes that “older investors, like young people, are investing their savings in a series of riskier holdings, such as cryptocurrencies and investments focused on specific sectors, such as healthcare and technology.”

“While young investors’ interest in bitcoin and other cryptocurrencies is well documented, Schroders data uncovers a surprising level of interest among older savers, including those over 75,” the asset manager’s report states.

According to this analysis, a third of the people surveyed between the ages of 55 and 74 claimed to have purchased cryptocurrencies in the 12 months prior to spring 2021.

Sixteen percent of those surveyed in that age group also invested in cryptocurrencies for the first time, while 17% said they were adding capital to their existing holdings. In addition, 15 percent of people over 75 years of age also invested in cryptocurrencies during the same period.

The threat of altcoins

The greater acceptance of bitcoin as a relevant asset in investors’ portfolio has led to its transition to a role as shelter value which, to a certain extent, has attenuated its volatility in recent months.

Its popularity has also standardized concepts such as the use of blockchain technology to certify and monitor the movements that an asset has had, or the creation of digital assets such as tokens to monetize and feed virtual spaces like the metaverse.

But paradoxically, this normalization of a new world partly thanks to bitcoin, also poses a threat to the cryptocurrency with the largest market capitalization, since it allows the emergence of emerging currencies such as cardano, solana or avalanche that have offered very attractive returns.

An example of this is Binance Coin, que it has appreciated 1,300 percent during 2021.

Rosh Singh, CEO and Founder of Quadency, explained to Bloomberg that retail investors may have been distracted by the massive rises of some altcoins, a factor that “also puts some pressure on bitcoin.”

Singh, even so, pointed out that optimism remains for next year, expecting a new rebound for bitcoin.

One year to consolidate your position

Whether bitcoin will continue to rise in 2022 or not is difficult to predict, with very disparate voices in the market betting on both a bullish movement and a totally bearish one.

Where there does seem to be some agreement, instead, it is in the fact that bitcoin can continue to consolidate its position as a kind of gold 2.0.

Michael Novogratz, CEO of Galaxy Digital Holdings explained it like this in the cryptoassets report of Goldman Sachs.

“Bitcoin is not prepared to process thousands of transactions per second. Paying for a Diet Coke with bitcoin would be like paying for it with gold. That will not happen, but the payment rails will be built on other blockchains,” explained Novogratz, adding: ” Bitcoin is a very convenient way to store value. “