“Bitcoin will.” That is how blunt was Jack Dorsey, the founder of Twitter, in assuring that the popular cryptocurrency will replace the dollar. But beyond Dorsey’s projections, the currency continues to experience strong volatility, which leaves the question open:It is convenient to buy cryptocurrencies in the US in 2022? This is what the experts recommend.
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Bitcoin, the most legitimate cryptocurrency, started 2021 trading above $ 30,000, but reached its all-time highs in November, bordering $ 70,000. However, in less than a month it fell below $ 50,000, losing almost half of all earnings for the year.
For some specialists, this volatility resembles that of 2018, when it fell to close to $ 3,000, after having reached a maximum of close to $ 20,000. However, there are some nuances that are worth considering.
Greater “social legitimacy”
In 2021, bitcoin achieved greater financial legitimacy. Large companies, such as Microsoft, PayPal or Tesla, already accept it as a means of payment; while the leading cryptocurrency exchange Coinbase began trading on Wall Street.
All this was underpinned by the boom in digital assets, such as non-fungible tokens (NFTs), and the take-off of the metaverse, which promise to be the ideal setting for transactions based on this type of currencies.
According to the teachers Erica Pimentel and Bertrand Malsch, from Queen’s University School of Business, the conditions exist to make it “increasingly likely that bitcoin will become mainstream in the near future.”
Both researchers note increased activity online – on Twitter and Reddit – where seasoned investors share data with beginners; the market for exchange platforms exploded; and greater investment in the infrastructure of technology that supports the market, expanding access and awakening the interest of traditional players.
Regulations vs. distrust
The lack of regulation is one of the biggest barriers that exist for the definitive acceptance of cryptocurrencies. In fact, China and the United States have decided to move towards the adoption of digital currencies (CBDC), but as an electronic version of their current paper currencies. Even the Asian country has established tough restrictions.
Only the European Investment Bank (EIB), the European Union’s lending arm, has taken some steps by issuing bonds on the Ethereum blockchain.
According to specialists, government supervision, together with the decision of several countries to consider digital versions of their national currencies, is likely to generate increased regulatory activity in 2022 that is likely to affect the performance of these currencies.
However, the scenario could be more auspicious if in 2020 the first exchange-traded fund for bitcoins in the United States is finally approved. The signature Grayscale Investments He has already submitted an application to create what would be the largest fund in the world.
Will volatility persist?
In any case, most financial specialists agree that 2022 will continue to be unstable for the value of bitcoins, although with certain nuances: while some rightly believe that it is necessary to exit this market, others suggest investing with caution.
Carol Alexander, a finance professor at the University of Sussex, estimates that the price of bitcoin could reach only $ 10,000 in 2022. “I would think about exiting bitcoin soon because its price will probably collapse next year,” he told the CBNC.
While acknowledging that it has greater institutional legitimacy, Kevin Werbach, a professor at the Wharton School of Business at the University of Pennsylvania, warned in an interview with Fortune than 2022 it will be “even crazier” for cryptocurrencies.
“It’s hard to think correctly when you’re in a bubble, and we’re certainly in one right now. It is impossible to avoid the conclusion that the bottom will eventually fall. So, I don’t know when that will happen, but that shakeup in the crypto markets will come, and then we will find out what is real and what is not, ”he says.
According to RA Farrokhnia, from the Columbia Business School, the persistent volatility of bitcoin may discourage its adoption in the short term as a means of direct payment, but seeing it as an investment opportunity is still complex. “There are more institutional investors dabbling in bitcoin, perhaps because they believe it will continue to appreciate in value or because it will be a hedge against inflation,” he explained.
Along the same lines, Pimentel and Malsch affirm that investors should be “skeptical” of the comments that are read on the networks. “Cryptocurrencies, after all, are still speculative and are not for everyone,” they warn.