Bitcoin is the first and most widely adopted cryptocurrency in the world. It was created by Satoshi Nakamoto, who first outlined its technology in a white paper in 2008. In basic terms, Bitcoin is a digital currency that allows peer-to-peer transactions to be recorded on the Internet. It is considered a volatile investment, and in this blog, we will look at the Bitcoin forecast for 2022.
Many people consider Bitcoin to be an asset worthy of investing in, and as assets go, it has one of the most volatile trading histories of all. The Bitcoin network was first launched in 2009. One Bitcoin consists of 100 million Satoshis. It is the smallest Bitcoin unit, divisible up to eight decimal places. It means that anyone can buy a fraction of a bitcoin for pennies, although all Bitcoin exchanges specify a minimum buy price, which here in the UK starts at around £20.
To give you an illustration of Bitcoins wild volatility, have a look at the following summary:
|Time Period||Value of 1 BTC|
|January 2009 to March 2010||$0.00|
|February 2011 to April 2011||$1.00|
The dates and values shown above are a few snippets in the history of Bitcoin (BTC) to date, and they clearly show the wild volatile tendency of cryptocurrency. So what is the Bitcoin forecast for 2022, and how accurate can we expect it to be?
The bitcoin price forecast for 2022
Given the volatile nature of BTC, a Bitcoin forecast is most unlikely to be that accurate. If we take a look at forecast extremes over the next six months, you’ll see what we mean.
On the one hand, the founder of Nexo Finance, Antoni Tenchev, forecasts the BTC price to reach $100,000 by the middle of the year, 2022. On the other hand, the BTC forecast offered by Carol Alexander, Professor of Finance and the Chair of Risk Management at the ISMA Centre, is that it could drop down to $10,000, which, if it happened, would see all of the gains that it made throughout 2021, wiped away.
The CEO of Swiss digital asset bank Seba, Guido Beuhler, says that his company’s internal valuation models are, at the time of writing, currently showing a Bitcoin cash forecast of between $50,000 to $75,000.
The influences that affect the BTC price
With such wide volatility in its price, it is important to understand what influences the price of BTC, particularly when looking at Bitcoin price forecast. The thing that affects the prices of most things is supply and demand, and Bitcoin is no different.
How supply and demand influences any Bitcoin 12-month forecast
The acceptance of BTC by the general public has a significant effect on its price. The more popular BTC is, the higher its price will rise, while low demand will decrease its value.
With Bitcoin being the flagship of cryptocurrencies, where it leads, other cryptos tend to follow. With more and more people, corporations, and investors beginning to use bitcoin and other cryptos for online transactions, it is reasonable to assume that the Bitcoin price forecast will remain positive.
Other significant factors that have to be considered with any Bitcoin forecast are local rules and regulations. BTC is decentralised. In other words, it is not linked to any specific central government. It means that specific government statements or decisions can and will impact its price.
Regulatory issues can also have an impact. Hard and soft forks can alter the quantity of Bitcoin in circulation, changing how investors perceive the currency at any one point in time. For example, in August 2017, the forking of the bitcoin blockchain into Bitcoin Cash caused a spike in volatility, increasing the valuation of both coins.
The other things that can influence and have a bearing on a Bitcoin to pound forecast include:
- The cost of acquiring BTC through the mining process
- The rewards that miners get for verifying blockchain transactions.
- How competing cryptocurrencies are faring.
- World news.
General news items such as the Coronavirus pandemic caused different reactions to the price of Bitcoin. When the pandemic was at its most virulent, the Bitcoin price rose significantly because people confined in their own homes took to the Internet in great numbers to carry out various research to ward off boredom.
But when new strains of the virus were identified, it had the reverse effect by causing the price to drop.
What you need to appreciate about bitcoin price projections
A Bitcoin long term forecast is probably about as accurate as having your fortune told. The severe volatility of any cryptocurrency makes it impossible to predict where its price will be in several days, let alone in several years. Whether you are looking at a Bitcoin 12-month forecast or a three-month forecast, it could be wildly inaccurate.
However, any sort of investing carries a certain amount of risk. The more volatile the commodity or product, the higher the risk. But there is always that chance of buying and selling at the right time and making a killing.
Reducing your risk when investing
With any investment, the advice on reducing the amount of risk is the same. Invest long-term and diversify. By diversifying, we don’t mean investing in several cryptocurrencies. Rather, crypto should be only one part of a diverse portfolio alongside many other non-crypto products.
The other key piece of advice is to invest long-term. The critical danger of investing in something like Bitcoin is being forced to sell it for cash flow when the bottom has fallen out of the market.
The volatile history of Bitcoin has seen it recover and grow from catastrophic drops in value time and time again, and this is likely to carry on being the case. Being able to ride out the storm is all-important. Don’t forget that many experts are predicting Bitcoin will break the $100,000 barrier this year, and at least one bitcoin long-term forecast is predicting it will be worth well over $1.5 million by 2030.