Bitcoin climbed throughout the most of 2021, aided by Tesla TSLA and El Salvador’s adoption of the numero uno cryptocurrency (even though Tesla CEO Elon Musk is progressively supporting the meme-themed dogecoin).
After reaching a historic high of about $70,000 per bitcoin in November, the price of bitcoin has been on a downhill, dropping roughly 40% of its worth and erasing $1 trillion from the entire cryptocurrency industry.
Furthermore, Wall Street behemoth Fidelity has predicted that more nations and also a central bank may follow the footsteps of El Salvador and Tesla and adopt bitcoin in 2022, emphasizing that those who purchase bitcoin while the price is low “would be competitively placed better than their counterparts.”
“There is a really great deal at stake here, where nations investing in Bitcoin now will be placed very well commercially than late entrants,” Fidelity analysts Chris Kuiper and Jack Neureuter mentioned in a report, further stating that they “will not be shocked to see many more sovereign countries and maybe even a central bank buy Bitcoin this year.”
“While I have a similar opinion as Fidelity, it’s still remarkable to see the bitcoin adoption game notion in a conventional financial institution’s report,” tweeted Bitcoin proponent Alex Gladstein, chief strategy officer at the Human Rights Foundation.
“While I have a similar opinion as Fidelity, it’s still remarkable to see the bitcoin adoption game notion in a conventional financial institution’s report,” tweeted Bitcoin proponent Alex Gladstein, chief strategy officer at the Human Rights Foundation.
El Salvador designated bitcoin as a legal tender besides the US dollar in September and started investing in it. In 2022, the country announced its intention to purchase additional $500 million worth Bitcoin, financed by the issue of tokenized bonds worth $1 billion, and to establish a “Bitcoin City” where taxes will be extremely low. Politicians of nations’ politicians are closely monitoring El Salvador’s bitcoin adoption for evidence of success, and several have said that they might explore a similar step if it succeeds.
Earlier this week, the mayor of Rio de Janeiro allegedly stated that he intends to commit 1% of the city’s treasury holdings to cryptos. In the US, Miami’s mayor, Francis Suarez, stated in 2021 that he intends to invest a portion of the city’s cash in Bitcoins. Nevertheless, Elon Musk’s Tesla joined business tech firm MicroStrategy (MSTR) last year by including bitcoin to its strategic treasury, igniting a flurry of comparable corporate purchases.
“Even in case rest of the nations does not agree about bitcoin’s investing strategy or uptake, they will be obliged to purchase a small quantity as risk mitigation asset,” the Fidelity analysts concluded. “Put differently a minor expense now may serve as a hedge against a much higher cost years from now.”
In the past two years, the bitcoin price has increased over 400%, while the entire cryptocurrency market has grown to about $2 trillion, from roughly $200 billion. Nevertheless, the bitcoin prices stay very volatile, collapsing 40% from its heights twice in 2021, despite Wall Street experts anticipating more bitcoin and cryptocurrency usage.
Bitcoin and cryptos are expected to gain traction with conventional investors and businesses in 2022. JPMorgan (JPM) equities market analyst Kenneth Worthington said in a research document a week before. Bitcoin is “exceptionally well-structured as a new age store of value, and this solid model has played a role in bitcoin’s renewed confidence and valuation,” Worthington noted, forecasting that this year will be “the year of the blockchain bridge” (enabling increased inter-connectivity between different chains) or “the year of tokenization” in financial sector.
