Over the past 12 months, Bitcoin has lost around a third of its value. It is currently trading at around $39,800, which is over 40% lower than the all-time high on November 10th, 2021 ($69,044). Why is the current bitcoin price falling, and is Bitcoin still worth buying?
Fundamental Factors
In recent months, the crypto world has seen a lot of uncertainty. The government of the United States is discussing measures to address the economic and security changes brought by virtual assets. Compared to Russia’s Invasion of Ukraine, this factor is more influential.
Do not rush to sell your bitcoins yet. This could be a great time to buy cryptocurrency as a rebound is likely!
Bitcoin and the Fed
Bitcoin is susceptible to the policies of the US Federal Reserve. In December 2021, its head Jerome Powell announced that the rate of asset purchase reduction would be doubled. This measure was designed to curb inflation, but it also shook the crypto market.
The effects on the current bitcoin price were negative, as the USA/EN authorities still view it as a supposedly risky asset. On the upside, the adoption of the coin is growing, which positively influences its image. As more institutions embrace Bitcoin, it will become more robust and stable.
The price at which you can exchange cryptocurrency is still highly volatile. It reacts to political and economic factors similarly to stocks. For example, once President Biden signed his sweeping executive order on crypto in March 2022, BTC gained around 10%. However, the rise was short-lived.
What to Do?
Fear and Greed index, which reflects the market sentiment, has been in the “Fear” zone for several months in a row. However, Changelly does not advise selling, as investors should not panic due to short-term dips. Over time, Bitcoin and other virtual assets will come into correlation with conventional instruments.
Historical Perspective — BTC Milestones
- Initially, Bitcoin found it difficult to take off. It was launched in 2009 and did not rise above $1 until 2011. That year, the coin skyrocketed to $29, but the jump was followed by a recession.
- In early 2013, the coin reached $200. In December, it soared to $1,200.
- 2017 was a bull year — Bitcoin reached $19,000 and entered a ranging market.
- In 2020, when the pandemic began, Bitcoin grew to 29,000.
- 2021 was the most successful year so far. The market cap reached $1 billion in February, and the price subsequently rose to over $63,000. Unfortunately, the boom was short-lived. By July, Bitcoin had lost over 50% of its value and remained highly volatile. November saw another peak at $67,000.
Price Prediction — 2022 and Beyond
Since the beginning of the year, Bitcoin has lost almost 20%. Its dynamics mirrored the stock market crash due to the looming increase of the Fed’s interest rate. Yet, some analysts provide a hopeful cryptocurrency overview.
Former White House Communications Director Anthony Scaramucci expects the price to hit $100,000 within 2 years. What’s more, he projects the cryptocurrency to ultimately be worth $500,000. This is a bold prediction.
David Jones, a chief market strategist at capital.com, has noted that the direction will depend on Bitcoin’s dynamics soon — specifically if the $33,000 low holds. If it does, Bitcoin may rebound to $45,000 and reach around $52,000 in December 2022.
Predictions for 2025
Cryptocurrency investment is not for the faint-hearted. Coins and tokens can be highly volatile in the short run, and it is difficult to predict long-term swings. As of now, Crypto Predictions cited by Yahoo gives the following estimates:
- January-March: BTC will start the year in a range between around 42,000 and 62,000. The February prediction is $50,661. The next month, the algorithms project a price from around $44,000 to around $65,000.
- April-June: BTC is expected to trade between around $45,000 and $69,000, averaging at roughly $54,000 in May and $55,000 in June.
- July-September: in this period, Bitcoin could rise to over $70,000. The company’s algorithm predicts a range between around $49,500 and $73,000.
- October-December: by the end of the year, Bitcoin is forecasted to rise over $61,000.
Final Word
Currently, Bitcoin investors should keep track of the regulatory changes in the crypto realm. Adoption and regulation of Bitcoin are the key factors determining its future. The market is still highly susceptible to external factors, but correlations with the stock exchange are already apparent.
