After a rollercoaster year in 2021, one of the biggest stories in trading history is set to continue in 2022 — and beyond. Bitcoin (BTC) is considered by almost everyone to be the most popular cryptoasset investing option among traders, with a market cap that grew from $200 billion to almost $1 trillion in a year*. The crypto favourite reached new heights in 2021 — smashing its all-time high from the previous year. This being said, however, Bitcoin has also had one of the most volatile trading histories.
Need to catch up on what’s been happening with Bitcoin prices? Wondering what the future may hold for crypto? Read on for a quick refresher on the history of Bitcoin value and what might lie ahead in 2022.
How has Bitcoin performed historically?
Bitcoin is known for being volatile, and its value has risen and fallen — sometimes dramatically — many times. In early 2010, one Bitcoin was worth as little as $0.0008. In July 2010, the price of a single Bitcoin jumped up to $0.08. That was the first of many major jumps in Bitcoin price.
Then, in 2011, Bitcoin went from $1 to $32 before dropping all the way back down to $2 before the year’s end. The ups and downs continued, with various bubbles driving Bitcoin prices up before popping. But, the floor has also continued to rise. In 2013, Bitcoin value eclipsed $1,000 before dropping to $315 by early 2015.
Many Bitcoin investors point to 2017 as the year when the crypto really took off. It started 2017 at around $1,000 and rose to more than $20,000 within 12 months. This rise started to earn Bitcoin, and cryptoassets in general, more notoriety from the public, businesses, financial institutions and government organisations.
Such extreme peaks and valleys can be common with assets, businesses or products when they are not completely understood or accepted as commonplace in everyday life. People have debated the legitimacy of Bitcoin for years. Some consider it the future of transactions; others still believe it is a fad.
*Past performance is not an indication of future results.
How Did Bitcoin Perform in 2021?
The COVID-19 pandemic continued to play a significant role in Bitcoin’s performance throughout 2021.
Uncertainty about the performance and viability of various industries, a declining stock market and general discomfort about the pandemic and its duration caused institutions and other big organisations to start making larger investments in Bitcoin. Plenty of newcomers learned how to trade and invest in crypto throughout the year, despite the impact of COVID-19. Kicking off the year at an all-time high of $40,000, Bitcoin soared beyond the $60,000 mark in the first months of the year. But, with the pandemic not just continuing — but surging — in many parts of the world, it quickly fell back to late-2020 levels and lingered there throughout June and most of July.
Despite this lengthy plateau, faith in the crypto continued, and holders’ patience was rewarded with almost continuous growth — bar a minor blip in September — that saw the price of Bitcoin crack $68,000 on November 10.
But the rollercoaster continued, and the high prices didn’t hang around for long. Despite many believing in the legitimacy, usefulness and value of Bitcoin, numerous global factors combined to drive down the price of many cryptoassets. Namely, the huge number of COVID-19 cases due to the Omicron variant, as well as predictions of rising interest rates and tighter monetary policies from the Federal Reserve saw the price of Bitcoin dip to early 2021 levels.
How Has Bitcoin Performed So Far in 2022?
Unfortunately, Bitcoin’s positive 2021 momentum has failed to continue in 2022 so far.
On January 1, Bitcoin sat above $47,000. When you look back at the previous 12 months, that price is more than $7,000 higher than at the start of 2021 – a sign that despite its volatile nature, the crypto continues to see its floor climb higher.
Over the course of a week, Bitcoin dipped below $42,000, and there was steady movement over the following week before a major drop saw the price hit $35,000 on January 22. The fluctuations have not stopped there, with Bitcoin rising to almost $45,000 on February 8.
Elon Musk has had plenty to say about Bitcoin and other cryptos in 2022, in much the same way as he did last year. On February 9, 2021, upon news that Elon Musk and Tesla (TSLA) had purchased $1.5 billion in crypto, Bitcoin set a new high by breaking the $45,000 mark. That meant the value had risen nearly 50% in less than two months. Tesla also announced that it would accept Bitcoin as a form of payment in the near future. This was an enormous vote of confidence that contributed to the unforeseen surge in Bitcoin’s value throughout 2021.
Musk’s tune seemed to change in 2022, however, with tweets from the Tesla CEO describing the potential environmental harm of blockchain networks. With such a wide reach on social media, Musk’s comments shined a public light on the issue and potentially negatively impacted the price of Bitcoin.
Russia’s central bank also announced that it was considering a blanket ban on the “use and creation of all cryptocurrencies.” This unsurprisingly ruffled some feathers in the Bitcoin community, especially since Russia is one of the biggest crypto mining countries globally.
It’s not all bad news for Bitcoin though. Growing vaccination rates around the world are supporting the notion that the pandemic is in its “endgame,” which will remove one external factor that could negatively impact Bitcoin’s price. Analysts also believe this price plunge is “emotionally charged” and is typical of many shakeouts in trading — whether share-based or crypto in nature.
Because the price of Bitcoin hasn’t been as low as this since July 2021, even governments are taking advantage. El Salvador — arguably the most well-known “Bitcoin-friendly country” in the world — announced via its president that it had purchased approximately $15 million in Bitcoin, thanks to its slashed price.
What Is the Bitcoin Price Prediction for 2022?
Considering its volatile history, making accurate Bitcoin predictions is difficult. And, as with trading currencies, stocks and other assets, there is no such thing as a sure thing no matter what past performance or future signs might indicate.
Despite the dramatic drop towards the middle of 2021, many analysts saw this as business as usual for an investment type that is notoriously volatile. The same can be said for its dip in January 2022. Many consider cryptoasset investments long-term plays, which means that those who invest should be ready to experience dramatic rises and falls along the way.
Because of this, many experts are bullish about Bitcoin’s prospects while also recognising its volatile history and potential for dramatic swings. If other countries roll out restrictions similar to those of China or what Russia is proposing, it could have a negative impact on Bitcoin’s near future. As Elon Musk tweeted, the environmental aspect also remains an issue, with mining requiring powerful computers that consume large amounts of energy and eventually end up as electronic waste. And, while it might not be a concern at the moment, new technology that overtakes cryptoassets or security issues such as the Mt. Gox exchange hack of 2013 could also play a role in Bitcoin’s value.
But others still see a bright future for Bitcoin. Regulation, such as that seen in El Salvador and Ukraine, and proposed in Brazil, might help legitimise the currency even more and lead to more confident investment. This can also attract more institutional support, which could make Bitcoin value a little more stable. Also, many investors, including influential whales, could see the current lows as a good “buy low” opportunity, which could cause the crypto to rise in value once again.
What May 2022 Hold For Bitcoin?
As mentioned earlier, predicting Bitcoin’s future performance can be a difficult task, especially since it is such a volatile cryptoasset and there are many factors that may influence its value.
Despite its poor start to 2022, many experts believe that Bitcoin’s volatility could be a positive this year. Guido Buehler, former chief executive of Swiss digital asset bank Seba, told attendees at the Crypto Finance Conference in Switzerland that Bitcoin could surpass its all-time high later this year. “Our internal valuation models indicate a price right now between $50,000 and $75,000,” he said.
Crypto also received a huge bump in October 2021 when the Securities and Exchange Commission (SEC) announced that it “won’t block industry proposals to launch exchange-traded funds based on Bitcoin futures contracts,” which was a landmark moment for the booming crypto market. Analysts believe a pure-play Bitcoin-based ETF could be available to investors as early as 2022.
Fidelity, one of the giants of Wall Street, also believes more companies will follow suit and adopt Bitcoin as an acceptable currency, much like Tesla and El Savador in 2021. The firm says it expects other countries and perhaps even a central bank to accept the crypto, predicting that those who buy Bitcoin while the price is low will be more competitive than their peers.
As more companies worldwide, much like Microsoft, PayPal, Twitch and Starbucks, move towards adopting Bitcoin as a form of payment in 2022 and beyond, the effect on its value will be interesting. Wider adoption of the digital currency may see a surge in its value, especially if the companies involved are successful and widely known. However, the introduction and enforcement of new government restrictions may stall adoption in some areas of the world.
Bitcoin future value predictions can change from hour to hour, much less month to month. Keep up to speed on everything crypto — and other investing updates — with the help of eToro’s news and analysis, and see what some of the most popular investors on eToro are doing with our CopyTrader platform.
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