Tech

Bitcoin does not start the year well

It does not seem, at least for the moment, that 2022 is going to be a good year for Bitcoin and, possibly by drag, for the rest of cryptocurrencies. And it is that if we observe its performance during the last months, we see that since the beginning of November its path is clearly downward. At the moment it manages to stay above the psychological barrier of 40,000 dollars and that it recovered in August, after falling below 30,000, which only a couple of months seemed absolutely unthinkable.

That Bitcoin should be written with v for volatility is something that everyone alreadyEven its staunchest defenders openly acknowledge. Its price depends entirely, today, on speculation, and as we have already seen on several occasions throughout 2021, it is enough for a relevant figure to make a statement related to the cryptocurrency for the price to rise like foam or plummet.

I say that it is something assumed by all, which is why the statements to Bloomberg by Fiona Cincotta, senior analyst of financial markets at City Index, call a lot of attention, «has been [Bitcoin] quite a shocking start to 2022. A lot is happening. We know that Bitcoin is volatile, but even for Bitcoin, we are seeing some really big moves.«. That even analysts, connoisseurs of cryptocurrency, are surprised by its instabilityIt doesn’t seem like a good sign.

Due to the current situation, there are already some qualified voices that point out that this year it could close with crypto below $ 20,000, that is, with a loss of value of more than 50% with respect to its current price. It is true, and it should be remembered, that Bitcoin is so influenced (for better and for worse) by so many factors that, in reality, a prediction is just that, an estimate of what could happen, but lacking enough information (which is still has not occurred), so they should not be taken as a certainty.

Now, since we are talking about a purely speculative investment, we have already commented on it previously, fear can lead to a self-fulfilling prophecy. Fear is contagious and if a certain consensus is generated about the fall in the price, it is possible that this consensus is, at least in part, responsible for said fall. Nothing new, actually, it is something that we see every day in practically any valued good.

The problem is that the threat to Bitcoin is not only given by doubts about its reliability, there are also external factors, already identified, that will not help. The most immediate is the crisis in Kazakhstan. The brutal repression carried out by the country’s security forces against the complaints of the population about the rise in the price of energy sources has already caused more than 160 deaths and 8,000 arrests. And how does this affect Bitcoin?

Well, on the one hand, because government repression has also led to a widespread internet blackout in the country, to which must be added that the increase in electricity rates directly affects the existing mining farms in the country. And in case you are wondering the weight of Kazakhstan in the global cryptocurrency community, you should know that it is calculated that about a fifth of the global Bitcoin hashrate is in that country.

But this is not all. It is expected that throughout this year the US Federal Reserve (FED) will adopt quite forceful measures to reduce the volume of market speculation, something that will also affect cryptocurrency operations. Interest rates are expected to multiply by at least four times throughout 2022. Conditions that will make cryptocurrency more expensive to operate.

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