Bitcoin, the original cryptocurrency, is made possible by blockchain technology, a method of generating and tracking digital assets and processing transactions. When bitcoin is doing well, other cryptocurrencies are likely to be doing well. When bitcoin is doing poorly, other cryptos are likely also suffering.
Nobody, however, seems to agree on the price of bitcoin in the future.
Why 2021 Was a Good Year for Bitcoin
Over 2021, bitcoin enjoyed a steep rise in its market value. At the start of the year, a single coin was valued at $32,000, and by April that number had doubled. Traders were optimistic that wider acceptance of bitcoin by merchants and big banks would support the price.
However, the promise outran the reality — there was still no way to use bitcoin for much of anything except speculative, risky trading. A decline in the stock market in late 2021, and a fall in highly valued growth stocks, carried cryptocurrencies down as well. Bitcoin finished 2021 at about $47,300. As of June 24, 2022, bitcoin is selling for $21,145.
The Risk-Off Trade
Bitcoin’s price has continued to fall through the first half of 2022, as has the stock market. Investors have turned to assets that perform well in a time of a slowing economy, higher inflation and rising interest rates.
As cryptocurrency is still widely seen as a risky, speculative asset, this “risk-off” trade brought bitcoin down to below $20,000 in mid June. This represents a loss of over two thirds of the value bitcoin reached at its November 2021 peak of $69,000, with no signs of sustained recovery in sight.
Concerns over the high electricity use associated with bitcoin mining and the banning of cryptocurrency transactions by China also weighed on bitcoin’s value.
Expanding Investment and Payment Use
Nevertheless, as more companies adopt bitcoin as a method of payment, its value could stabilize. Major companies that already accept bitcoin include Microsoft, AT&T, Starbucks, PayPal and Amazon, although you must jump through a hoop or two to pay that way.
In addition, as more platforms make room for bitcoin trading, the market should expand among individual traders and investors. While Coinbase, Kraken and online investment firms like Robinhood and Webull all allow the purchase of cryptocurrency, big, traditional brokerages are just climbing onboard.
Goldman Sachs, for example, announced in April that it would give high-net-worth clients access to bitcoin and ethereum. Other brokerages, such as Schwab, Fidelity and TD Ameritrade, simply allow their clients exposure to the crypto market, although Fidelity will allow companies to allow their employees to invest up to 20% of their 401(k)s in bitcoin, NBC News reported.
For the most part, however, these companies offer trading in coin trusts and exchange-traded funds that hold crypto assets.
What Is the Future of Bitcoin? Whales Dive In
The future price of bitcoin depends on whether digital currencies can serve as useful financial assets. There was little support for this concept among financial newsmakers in the early years, but some once-skeptical major investors have come around.
Buffet and Others Now Believers
Warren Buffett, whose Berkshire Hathaway company has rewarded investors with tremendous returns over decades, once described cryptocurrency as “rat poison squared,” and he swore he would never touch it. But by purchasing NuBank, a digital “neobank” involved in the crypto space, Buffet has given bitcoin a secondhand vote of confidence.
Lloyd Blankfein, former chairman of Goldman Sachs, has announced that he’s “evolving” on bitcoin and other cryptocurrencies. Jack Dorsey, founder of Twitter, resigned his job as CEO of that company to run Block, a payment processing leader that is now developing new digital currency applications.
Adoption by these and other corporate leaders could support a reversal in bitcoin’s free fall and bring higher value by the end of 2022.
What Will Bitcoin Be Worth in 2022 and 2023? Educated Guesses
User-generated cryptocurrency price predictions on CoinMarketCap forecast that bitcoin will reached $39,003 by June 30. For this to be the case, it would need to nearly double its current value.
Looking further ahead, two expert panels recently weighed in with bitcoin price predictions leading into next year. A 35-member group reported by Forbes expects bitcoin to start the new year at about $76,000.
The second panel is less bullish. That one, according to Forkast, scaled back an earlier target to $65,185 as 2022 draws to a close. The cryptocurrency exchange Changelly expects bitcoin prices to range between $53,039 and $64,734 in 2023, with an average target of $54,570.
Ian Balina, founder of crypto research firm Token Metrics, sees bitcoin in a down cycle due to general investor pessimism on risk assets, but he also sees a benefit from the development of Web 3.0, a new blockchain-based internet. That said, bitcoin is an old-school cryptocurrency, which could give Web 3.0 coins like chainlink and polkadot an edge over the longer term.
More practical uses of bitcoin and cryptocurrencies are coming online. When trading isn’t the only thing you can do with them — except for some digital shopping options — the value of these new assets could increase.