- The recent flash crash saw Bitcoin lose one fifth of its value
- Growing threats to BTCs status as market leader and most prominent digital asset are affecting its price momentum
- Despite being plagued by volatility in the short-term, an upwards long-term trajectory remains viable, despite obstacles
The recent flash crash that occurred on December the 4th saw the price of Bitcoin (BTC) drop as much as 18% in the space of 24 hours, tumbling from $80,000 AUD to a temporary low somewhere in the vicinity of $66,000 AUD according to CoinMarketCap’s chart. With BTC’s value sitting at around $71,846 AUD at the time of writing, and its daily trajectory hinting very slightly at the possibility of a typically swift recovery having commenced, a tentative stability seems to have returned to Bitcoin’s price and the market in general.
Bitcoin’s (as well as the broader market’s) characteristic volatility is highlighted in the midst of these rapid price drops, most peculiarly in the sense that BTC’s sudden loss of one-fifth of its value is neither unprecedented nor overwhelmingly drastic in the context of its performance in the past few months.
The bottom of BTC’s sharp dip on December the 4th momentarily set its price back to the relatively recent point of 2 months ago, which was only 1 month before Bitcoin recorded its current all-time high. To provide a stock market comparison, with their fundamental differences as investments aside, the same 18% decrease applied to Amazon’s current price would send its price back to what it was 17 months ago.
The propensity of BTC’s value to increase with formidable momentum, in combination with its price’s tendency to collapse at a moment’s notice, makes making short-term price forecasts a fool’s errand, if not (exact) long-term price predictions as well. However, going off past performance, it would seem that Bitcoin remains on track to set new highs within the next year. That said, experts hold a range of opinions regarding Bitcoin’s future price trajectory (one big wig investor recently warned Bitcoin could fall by 80% after tapering by the Fed).
Before we get into Bitcoin price predictions for 2022 and beyond, though, first, let’s have a little context about Bitcoin (BTC).
In this bitcoin story…
- What is Bitcoin?
- Is Bitcoin A Safe Store Of Wealth?
- Is Bitcoin An Alternative To Gold?
- Will Bitcoin Be Accepted By Governments?
- What Are The Threats To Bitcoin’s Dominance?
- Does Bitcoin’s Price Still Affect Other Cryptocurrencies?
- Bitcoin Price Prediction 2021
- Bitcoin Price Prediction 2022
- Bitcoin Price Prediction 2023
- Bitcoin Price Prediction 2025
- Bitcoin Price Prediction 2031
What is Bitcoin?
As the world’s first and most famous cryptocurrency, Bitcoin has led blockchain technology’s revolutionary charge from the front since its inception. BTC blazed a trail when it initially established its place in popular consciousness in 2017, and in the years following it consequently afforded all other cryptocurrencies the possibility of flourishing in its wake.
Despite Bitcoin’s long-established prominence, it appears that those smaller cryptocurrencies that it once forged a path for are now beginning to close in on BTC’s lead, or are at least expanding their own share of market dominance. Major currencies seem to slowly but steadily be closing the gaps that have typically set BTC apart from them, in the sense that for some, their distance from Bitcoin’s market cap size is shrinking, and for others, the crypto investors’ level of recognition of their unique features is beginning to reach levels comparable to that of BTC.
Among the major reasons for Bitcoin’s increasing need to prove itself as market leader are serious questions around its technological versatility, such as those regarding its scalability and whether it can improve transaction speeds, leading BTC to face fierce competition from rival coins with their own unique capabilities.
As one example, Ethereum, in addition to offering an alternative currency and store of value in line with Bitcoin’s function, offers an entire ecosystem which many estimate has a strong potential to become the backbone of a decentralised world wide web, on which much of the world’s technological infrastructure will be built. This technological edge and the anticipation of its wide-ranging capabilities are likely major reasons why Ethereum has increased more in value in the past year than Bitcoin has by a substantial margin, reducing the difference in their total market caps, which nonetheless remains vast.
The fact that much of Bitcoin’s value is intrinsically tied to its very status as leader is also a danger in that, if growing concerns about its true suitability to become an essential part of the global economy manage to derail positive sentiment, attention may shift to another currency deemed more apt. As such there is a danger that Bitcoin’s value is overly reliant on anticipation and positive momentum rather than actual usable and non-replicable features.
Is Bitcoin A Safe Store Of Wealth?
Bitcoin is being used by some investors a store of wealth and a hedge against inflation, in a (somewhat) similar fashion to gold. However, its volatile nature means you should never invest more in Bitcoin than you can afford to lose. Its up and down nature naturally makes some investors jumpy. Is Bitcoin An Alternative To Gold?
Is Bitcoin An Alternative To Gold?
“There are some uncanny similarities between Bitcoin and gold,” ABC News business editor Ian Verrender wrote in an article posted in May.
“Like gold, Bitcoin is rare. The total supply has been limited to 21 million tokens. And the pace at which the tokens are released periodically is slowed, so that the final coin won’t be minted until around 2140… Unlike gold, however, Bitcoin is virtual. It exists in the ether and has no utility or use other than as a means of exchange.”
“[But] gold… has been on the decline since peaking in August last year. Even the chaotic slide on global bond markets in February and March this year failed to fire it up. Government bond prices cratered on fears of a return of global inflation, the kind of news that ordinarily would see gold spike.”
As DMARGE reported in July: “The inference here is that gold’s status as the one unassailable store of wealth, turned to during times of economic uncertainty, could be under threat – and perhaps Bitcoin, with its decentralised blockchain ledger and mutability, will rise to take its place. Either that or we’re all just getting more greedy…”
DMARGE spoke exclusively with James Whelan, Investment Manager at VFS Group in Sydney and co-host of business podcast The BIP Show to get his take on Bitcoin replacing gold earlier this year? He said:
“If everything stopped working and we had to actually go back to the barter system, it’s very handy to have gold in your safe, which is divisible and tradable. Whereas, if nothing’s working… your Bitcoin wallet is effectively as useless as a doorstop.”
“Part of the price of gold that’s factored into it is that ‘calamity value’. Bitcoin does not have that store of value.”
Another reason Bitcoin will never become a store of wealth in the same way gold is, Whelan said, is because governments and central banks are hesitant to support it.
“Governments don’t like it because they can’t track it (well, governments can track it, but people don’t think that they can). Governments don’t like the fact that [people are] using money which isn’t government-controlled… If they had the chance of replacing Bitcoin with their own central bank money, which is more controllable, then they would probably be opting to go in that direction.”
Will Bitcoin Be Accepted By Governments?
Mr Whelan, a little later on in 2021, told DMARGE: “I think that the investment community is now seeing that there needs to be an allocation to a certain amount of crypto because people are seeing it as an alternative asset and potentially, touch wood, god forbid, a store of wealth.”
“Look at the Bitcoin price vs the Gold price – annoyingly – inflation is absolutely pumping [so] why is gold not performing? Look at the Bitcoin price – potentially people are buying Bitcoin instead of Gold as that store of wealth against inflation… Maybe.”
Mr Whelan added: “Right now all eyes are on the SEC in the United States on their approval of the first crypto ETF (or the first bitcoin ETF), which will then mean that people will have a place [to invest]. Once it’s done and accredited by the SEC it falls under all of their rules about financial stability and it has all these boxes it needs to tick and it comes under the coverage of one of the largest markets in the world and one of the better regulators in one of the largest markets in the world.”
“If the SEC lets this [happen] it means the ETF will be approved, which then means people like me actually have somewhere to invest safely on the market on the same platform where everyone else can see all this stuff.”
“The investment community will have a more safe and secure place to actually have that area where I can say to a client on their portfolio report: ‘Look at this, as discussed, here is your 5% allocation to a Bitcoin ETF. It’s run by a reputable ETF provider, it’s on a market which is where all your other stuff is as well.’ That’s so important for a client to see.”
What Are The Threats To Bitcoin’s Dominance?
The largest of all threats to Bitcoin’s short term price and long-term trajectory alike, is that of governmental interference, which not only has the potential to ban the use of cryptocurrencies including Bitcoin, but also the potential to stifle the belief in its viability to succeed. With belief in Bitcoin’s future being crucial to its survival and levels of investment, announcements of increased regulations and bans, while not guaranteed to completely stop Bitcoin in its tracks, unavoidably have the capacity to have an enormous negative effect on BTC’s price and status.
Despite these concerns, Bitcoin’s reputation as the original cryptocurrency is nonetheless remarkable and tangibly powerful, and the considerable level of widespread belief in its potential to cement its position the world’s primary digital currency is exemplified by instances like governmental investment in it, growing mainstream media coverage of its activity, and perhaps most notably in the past year, endorsements from major companies and its inclusion (in ETF form) on traditional markets.
As such, any substantial indicator of progress in being adopted and embraced by societies, which is perhaps most evident in the case of El Salvador making BTC its national currency, tends to provide a boost to the momentum underpinning Bitcoin’s mission to establish itself as a functioning backbone of the world’s monetary infrastructure.
You could also argue more eco-friendly (and faster transacting) cryptos like Ethereum – and those that are making a name for themselves beating Ethereum at its own game (but which are yet to prove themselves over the long term) like Cardano, Solana and Nano – are a threat to Bitcoin’s dominance. But many day to day investors see Bitcoin more as a yardstick and a hedge against inflation than a tool. So if you look at it that way, better technology and a growing crypto market is good for Bitcoin too.
Does Bitcoin’s Price Still Affect Other Cryptocurrencies?
Judging by the last flash crash, in many cases, yes. Bitcoin’s drop was followed by slumps in other big tokens, including Ethereum, Binance’s BNB, Solana, Cardano and Ripple’s XRP. But some would argue other segments are becoming more self-sufficient at generating optimism and value. At the moment though Bitcoin’s price swings do still typically affect the market as a whole.
Bitcoin Price Prediction 2021
With the Bitcoin price currently at $71846 AUD, it appears that many experts and investors will be anticipating to see whether BTC’s value will retrace back up to the record highs it reached in November, and at what point in the future it will surpass them.
As seen recently, the unpredictable nature of the cryptocurrency market means that even the best guesses of experts can be made redundant by volatility and external influences. Nonetheless, they can be offered as indicators of the general sentiment around Bitcoin’s projected trajectory.
NextAdvisor, a branch of TIME magazine, surveyed experts regarding their Bitcoin price predictions.
Founder of crypto research company Token Metrics, Ian Balina predicted that by the end of this year Bitcoin would be worth $105,470 AUD, NextAdvisor states in an article published on December the 7th.
Louis Navellier, however, Chairman and Founder of Navellier & Associates in Reno, Nevada, which manages approximately $2.5 billion in assets, recently made headlines by warning Federal Reserve tapering could pop the Bitcoin bubble.
“The Fed is tapering, and this should create a correction in risk assets, of which Bitcoin is a part,” Navellier said, according to an article published by Business Insider last Friday.
The more the Fed tapers, the more volatility we should see in both stocks and bonds—and yes, bitcoin, too.”
The Fed is now beginning to “taper” its money slinging, following a hard rise in inflation and a recovering labour market.
While some believe the market is still sloshy (with money), even though the Fed is beginning to taper, and doubt the Fed will let markets ever fall too far, others are making more dire predictions.
Navellier, for instance, warned that Bitcoin could fall to $10,000 per Bitcoin, a stinging decline of 80% from its all-time high set last month of almost $70,000 (Bitcoin hasn’t been as low as $10,000 since September 2020).
“I would take a decline below $46,000 (the 200-day moving average) to be a yellow flag and a decline below the spring low of $28,500 to be a completed massive double top which points to a decline to below $10,000, which incidentally would match many of the multiple 80%+ declines in its storied history,” Navellier wrote, according to Business Insider.
Forbes reports: “The Bitcoin price has recorded similar such declines in the past, although bullish bitcoin and crypto investors remain confident Bitcoin’s price is going far higher in coming years.”
Business Insider reports: “While Navellier is making a dramatic prediction, Bitcoin has endured a few 80% dives before, the most recent of which started in December 2017 and spanned most of 2018. There were plenty of causes, including the government’s refusal to allow a Bitcoin ETF to trade, fears about hacks, and warnings from prominent investors like Warren Buffett.“
Bitcoin Price Prediction 2022
Matthew Hyland, a blockchain analyst, made a BTC price prediction of $351,676 AUD by January 2022, citing the likelihood that momentum will explode once the $100,000 USD milestone is surpassed. This also comes from NextAdvisor’s aforementioned survey.
Bitcoin Price Prediction 2023
Jurrien Timmer, director at Fidelity Investments, predicted that Bitcoin could reach the equivalent $140686 AUD by 2023, according to NextAdvisor’s survey.
Bitcoin Price Prediction 2025
A panel of experts put together by Finder drew an average 2025 Bitcoin price prediction of $351,157 AUD for the year 2025.
Bitcoin Price Prediction 2031
Robert Breedlove, Founder of Parallax Digital, made a bold prediction of $17.6 million AUD per Bitcoin by 2031.
This article is of a general nature only, and is intended for solely informational purposes. This is not financial advice. No-one can guarantee the price of Bitcoin will keep going up. Never invest more money than you can afford to lose into any crypto.