Bitcoin (BTC) launched in 2009. A single BTC was worth $1 in February 2011. A decade later, Bitcoin reached an all-time high of $68,521.
So, can the price of Bitcoin continue to rise through 2022? Explore five promising signs that BTC prices may see continued growth in the coming year.
1. Increased Adoption of BTC as a Payment Method
More financial institutions and governments are accepting Bitcoin as a payment method. Increased adoption of BTC for payments helps boost the value of the cryptocurrency.
PayPal was one of the latest financial companies to accept Bitcoin. In addition, in June of 2021, the country of El Salvador made Bitcoin legal tender.
Adoption of BTC signals that it is a viable currency with real value. More financial institutions will be willing to get on board with Bitcoin and other cryptocurrencies. As the market cap for Bitcoin grows, the price per coin also rises.
2. Using Bitcoin as a Hedge Against Inflation
Bitcoin is becoming increasingly used as a hedge against inflation for savvy investors. Traditional hedges, including securities and bonds, have unperformed throughout 2021, which leads investors to explore other safe havens.
The annual inflation rate in the United States was 6.2% for the period from October 2020 to October 2021. Higher rates of inflation decrease the purchasing power of the US dollar.
As the dollar’s value decreases against other currencies, more investors are likely to look at cryptocurrency as an investment option. As a result, more crypto investments help boost the price of Bitcoin.
3. Large Scale Institutional Investment in Crypto
Growing interest from publicly traded companies indicates that Bitcoin is likely to stick around. Several companies have sold significant US treasuries to purchase Bitcoin as a hedge against a volatile market. Hundreds of millions of dollars are pouring into the crypto market.
For example, MicroStrategy sold $425 million worth of US treasuries and used the funds to purchase 38,250 BTC. Square Inc sold $50 million in US treasuries to buy 4,709 BTC.
4. The Introduction of Bitcoin Exchange-Traded Funds
The year 2021 saw the introduction of several Bitcoin exchange-traded funds (ETFs). Crypto ETFs signal that more investors are interested in cryptocurrency, which has attracted the interest of brokers.
One of the first Bitcoin ETFs was the VanEck Bitcoin Strategy ETF (XBTF). It is an actively managed ETF that invests in standardized Bitcoin futures contracts. It has a net expense ratio of 0.65%, lower than the average expense ratio for a mutual fund.
The release of additional crypto ETFs should be taken as a sign that the price of Bitcoin will continue to rise. Furthermore, it shows that major investment companies and consumers are confident in the future of crypto and want to include Bitcoin in their investment portfolios.
5. Increased Government Regulations on Cryptocurrencies
Due to the amount of money pouring into the crypto market, governments are starting to impose regulations to protect investors. In addition, increased government regulations help increase the credibility of cryptocurrencies, including Bitcoin.
Cryptocurrency is considered legal property in many countries, including the United States, the United Kingdom, Australia, and Japan.
In Canada, crypto exchanges must register with local financial regulators. In the United States, crypto exchanges need to register with the Financial Crimes Enforcement Network (FinCEN). Instead of making cryptocurrency illegal, governments find ways to regulate it and make it part of the economy.
Many signs point to the price of Bitcoin (BTC) continuing to increase in 2022. Some experts predict 1 BTC may equal $100,000 early in the year. However, investing in crypto still comes with significant risks. Bitcoin profitability depends on whether investors continue to trust it as a viable currency.
