DeutschNot another Bitcoin price prediction – this isn’t supposed to be one that predicts a possible price either. Rather, we want to take a look at the current situation and see what has changed.
While the Bitcoin price continues to struggle to hold the $20,000 mark, comparisons with the dot-com bubble are once again mounting. In particular, Bitcoin critics feel confirmed in their thesis that Bitcoin is a worthless object of speculation. It should be clear that the current market phase is not for investors with weak nerves. However, this also applies to investors who have invested in companies such as PayPal or Netflix.
- Bitcoin
(BTC) - Price $116,942.00
- Market Cap
$2.33 T
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Companies like Coinbase or Nuri are cutting a not inconsiderable proportion of employees and it is a fact that we have finally arrived in a bear market. This time, however, it’s not just Bitcoin. It is not only the crypto industry that has come under pressure. From a crypto perspective, however, we are primarily interested in: Will Bitcoin recover again?
Before the Bitcoin Price Prediction: the Current Market Situation
If we think of Bitcoin’s 4-year cycle, which is strongly linked to the halving event, the current development is not unknown. A year and a half after the halving in 2016, the Bitcoin price plummeted from almost $20,000 to as low as $3,000. When it subsequently looked as if prices would rise again, the Corona pandemic struck. Bitcoin bounced off the $3,000 mark again. The fact that Bitcoin is currently around six times the value of 2 years ago is hardly an issue. Instead, one only reads news about the loss of value and the risks involved in investing in cryptocurrencies. However, the familiar pattern does not make a Bitcoin price prediction any easier.
We are currently seeing the result of a monetary policy that had fueled the financial markets. Inflation is now reaching threatening proportions worldwide. Switzerland is still doing very well compared to other industrialized countries when we draw a comparison with Germany. The USA also has a lot to do with an inflation rate of over 8 percent. Most recently, the US Federal Reserve raised the key interest rate by 0.75 percentage points. After months of hesitation, the European Central Bank has now also announced an increase to 0.25 percent. The ECB following suit here was only a matter of time.
However, raising such low percentages with an inflation of 8 percent is not a real solution. In order to cushion inflation, higher interest rate hikes would be necessary in themselves. However, implementing this in practice is not possible. Due to the national debt, this would lead to the bankruptcy of many states. The consequences would be devastating. The dangers that threaten as a result are significantly greater than just the fall in the price of Bitcoin.
Through interest rate hikes, savers can also receive interest on their capital again. However, due to the high inflation, one still makes a large loss in real terms. Nevertheless, the rise in interest rates leads to capital flowing out of risk assets. This increases the selling pressure. We are currently seeing this with many stocks as well as with cryptocurrencies. In addition, however, there are crypto-specific difficulties.
Confidence in DeFi Sector is Dwindling
Decentralized Finance was one of the main drivers for the start of the bull run. Together with the NFT hype, numerous platforms, especially for smart contract platforms such as Solana (SOL), Avalanche (AVAX), Polkadot (DOT) or Cardano (ADA), ensured rising prices. These cryptocurrencies are still among the 20 most valuable cryptocurrencies on the market. For a long time, more than 200 billion US dollars were invested in these protocols, but now the value is well below 100 billion US dollars.
The falling prices on the crypto market are not solely responsible for this. The best example of the dangers of DeFi is the case of Terra (LUNA). Within a few days, the entire value of LUNA and the stablecoin TerraUSD (UST) evaporated. Confidence in Solana is also currently declining after the lending protocol Solend even wanted to confiscate the deposits of a whale (around 5.7 million SOL) in order to avoid a rapid price drop due to a sale.
What was well-intentioned, however, is a no-go when we think of the term “Decentralized”. This shows once again that there is no completely decentralized protocol to date and such protocols are always centralized to some extent. The dangers of Proof-of-Stake should not be underestimated at this point, which in principle completely equalizes decentralization, especially with smaller coins.
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Bitcoin Adoption: are We Expecting Stricter Regulation Worldwide?
In El Salvador and the Central African Republic (CAR), Bitcoin has now been declared the official currency. What sounds spectacular has not brought much so far. But what do you actually expect here? That the change from the fiat to the crypto system will happen in less than a year? The adoption of technology has always taken its time. In the Central African Republic, almost 90 percent of the population does not even have internet access. This shows that even the internet itself has not yet reached its limits. So how fast should the progress of Bitcoin adoption be? The volatility in the crypto market will only decrease with increasing time. The fewer participants in the market, the more likely high volatility is.
However, the current price crash not only brings simple critics to feel called to adorn themselves with the laurels of having predicted a crash. Central banks also see themselves confirmed here and hope to inspire people for stricter regulation through such market phases. There is no question that regulation is necessary for crypto adoption. In particular, cases like Terra (LUNA) or now Celsius should not happen.
However, this should not lead to further restrictions on blockchain technology. Whether cryptocurrencies are taxed in India or Portugal or not should in principle be irrelevant. It is about not slowing down the promotion of technology. The EU recently caused a lot of uproar with the MICA draft and the ban on unhosted wallets. That is the wrong way.
Regulation in the EU will still be a major issue, but the EU’s decisions have no impact worldwide. Around 450 million people live in the European Union. Even if the purchasing power is greater than in many other parts of the world, Europe as a whole does not play an important part in the crypto industry. Only Switzerland can stand out thanks to the Crypto-Valley, but it is lagging behind compared to the other states.
As in many areas, the USA will set the direction when it comes to the regulation of Bitcoin and other cryptocurrencies. At least some positive points had emerged here recently. It is not the first time that Bitcoin has fallen so sharply in percentage terms. This at least makes it easy for more experienced holders to hodl. However, profits should still be realized from time to time.
Bitcoin Price Prediction: Nothing Has Changed
You have to get used to the fact that the market situation will always depend on the Bitcoin price. If the Bitcoin price rises, there will be a large number of analyses and forecasts that want to prophesy the next record value. If the Bitcoin price falls, on the other hand, there is talk of an end to the entire sector.
If we compare the current situation with that of a year ago, nothing has actually changed in the fundamental value of Bitcoin. This is not about a Bitcoin price prediction. In itself, Bitcoin has become the official means of payment in two countries this year, which is even positive.
Bitcoin has neither technically failed this year, nor has it been banned in numerous countries. Only China has confirmed the crypto ban.
Looking at the Bitcoin protocol, you will find that nothing has changed. Bitcoin is still decentralized. Bitcoin is not banned worldwide. There will be a maximum of 21 million BTC and that will not change. Instead, we only see more and more serious investors and companies opening up to crypto. Bitcoin does not promise price gains. Nevertheless, the simple principle of supply and demand shows that the Bitcoin price will continue to rise if demand increases. And it does, even if it may not be obvious at first glance. Therefore, in the long term, nothing should stand in the way of a recovery in principle. Whether Bitcoin falls to $10,000 or $5,000 in the short to medium term is irrelevant for this.
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