The Bitcoin forecast for 2022 – should we expect growth?

The year 2021 was a year of abundance for the digital asset market. His Majesty Bitcoin grew from USD 29 thousand to USD 69 thousand at the year’s high. Don’t even ask about its ‘junior brethren’ altcoins, the growth of some of which amounted to dozens of thousands percent. The general market capitalization increased from USD 759 billion to USD 3 trillion at the 2021 year’s high.

Let’s analyse how the market operated and developed.

An important growth drive was represented by an inflow of money in BTC from institutional investors, who accumulated their cryptocurrency balances during the whole year.

• We should also note Elon Musk’s adventures. One day he provoked a powerful increase by his tweets about buying Bitcoins for USD 1.5 billion by Tesla, another day he caused a collapse by the news about stopping to accept Bitcoin as a means of payment for new Tesla cars and yet another day he played with his declaration of love for the meme Dogecoin. However, the fact remains – even after selling a part of the held cryptocurrency, Tesla is a major Bitcoin holder and Musk himself holds some of his personal funds in Bitcoin and Ether.

Bitcoin also continued to actively develop at the infrastructural level.

• The news about the launch of the first regulated Bitcoin futures ETF in the United States significantly supported the market. Now it has become easier for institutional and regular investors to make money on Bitcoin.
• The Lightning Network payment system achieved unprecedented growth rates. It allows solving the Bitcoin network scaling problem in a fundamental way by reducing commission fees and increasing transaction speed. The number of Bitcoins passing through Lightning during a day, as well as the number of payment channels, increased threefold.

It goes without saying that the main sensation of the year was the Bitcoin acceptance as an official means of payment at a state level. As of now, only El Salvador, a small developing country in Central America, took this leap of faith. However, its move turned out to be inspiring and several other states announced that they considered Bitcoin as an alternative means of payment.

However, the key Bitcoin rate growth driver in 2021 was macroeconomics – all key central banks continued to print money fiercely, their currencies devalued and the inflation grew to the highest values of the decade. Demand on non-inflation assets, such as Bitcoin, was very high in this context.

Despite a rough correction at the end of 2021, bullish expectations for the year 2022 still prevail in the expert environment. Thus, Bloomberg Intelligence forecasts that the Bitcoin rate will grow up to USD 100,000 in 2022. Actually, you can see this round number quite often in analytical forecasts.

“I believe that Bitcoin will continue to be volatile, however, the long-term tendency is upward and the general market capitalization will grow twice, on the average”, – forecasted the Director General of a Norwegian mining company Kjetil Hove Pettersen.

Many expert expectations for the year 2022 are connected with the Lightning Network success development and approval at the state level and in the major investment company environment. Experts also pay attention to the fact that Bitcoin hasn’t experienced the parabolic growth stage yet, which usually foretells a reversal. Thus, eToro broker analysts reminded that the bullish market was completed with a sharp rise both in 2017 and 2013. And Bitcoin grew in 2021 only with strong corrections and pauses.

Expectations with respect to the Bitcoin rate in 2022 are more restrained outside the crypto-community environment. Wall Street major bank experts mainly abstain from specific goals stating that the market volatility will persist. The Federal System policy tightening and rate growth are key risks, which can be seen in a majority of forecasts.

We should also add that Bitcoin rate forecasts are a thankless job and often reminiscent of ‘hit or miss’. The rate can be either significantly lower or significantly higher than forecasts. There is also a historical regularity that Bitcoin grows through the years, however its repetition in 2022 is not a must.