Several analysts say this 2021 was the year of cryptocurrencies. Bitcoin price rose by nearly 70 percent, and the entire crypto market gained a combined approximate of $2 trillion in value. However, despite this success, experts believe that a price crash is inevitable in 2022. One of them even argued that Bitcoin value could go as low as $10,000.
Cryptocurrencies achieved many amazing feats this year. Unfortunately, these activities also caught the attention of regulatory officers. A new set of regulatory rules might be implemented soon, which could drag the whole market trade down for a certain duration.
This urged CNBC to consult analysts for their Bitcoin price prediction for 2022. Experts explained two different reasons for Bitcoin's potential crash.
Bitcoin Price Prediction 2022: BTC Crash in Bearish Market
For reference, Bitcoin surged to $69,000 in value last November. But at the time or writing, BTC is trading at $48,280.9 with a 0.82 percent downward growth in the last 24 hours, per CoinDesk. These markets show a clear decline of over 20 percent from recent highs.
However, it should be emphasized that Bitcoin markets are highly volatile, and these predictions do not act as guarantees for future market trade.
According to Carol Alexander, a professor of finance at Sussex University, Bitcoin is no more than a "toy" investment, since it "has no fundamental value." She said history is set to repeat itself, citing the Bitcoin trade in 2018 when it dropped close to $3,000 after reaching a $20,000 high.
Alexander also pointed out that coins like Ethereum, Solana, Polkadot and Cardano might eventually replace Bitcoin in 2022. She said "as retail investors begin to realize the dangers of trading bitcoin, especially on unregulated venues, they will switch to ... other coins belonging to blockchains which actually serve an essential and fundamental role in decentralized finance," per CNBC.
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Bitcoin Strategy ETF
Another contributing factor to look out for is the approval of the first Bitcoin exchange-traded fund in the U.S. This is because the ETF might be too risky for novice traders, and the overall market might be erratic during the trade.
According to Vijay Ayyar, vice president of corporate development and global expansion at crypto exchange Luno, the Bitcoin Futures ETF could involve rolling over contracts that amount to 5 to 10 percent of the total shares.
Lastly, it is also worth noting that a lot of investors are getting interested in decentralized finance (DeFi) more than Bitcoin's system. CNBC said the total money deposited to DeFi services surpassed $200 billion this year, which indicates a strong support among investors.
All these factors paired up with regulatory rules are expected to take a toll on Bitcoin's trading value. However, as previously mentioned, Bitcoin is highly volatile, so it is hard to determine whether these predictions would prove true.
For now, traders are advised to tread carefully in the market. They should also keep an eye out on the market trend, which can shift at any moment.
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