Bitcoin’s growth over the years has blown everyone’s mind. From a small project, it has turned into a multi-trillion business. It has proven its ability to produce multi-millionaires despite several critics going against its credibility.
Back in 2013, negative talks about Bitcoin were widespread, and there were claims that it only exists on the dark web. In its early days, every Bitcoin was only worth pennies, about $13.40, but now that it’s worth more than thirty thousand dollars, it would be pretty difficult that it used to cost just about ten bucks.
Ten years ago, people could mine Bitcoins at home. Unfortunately, Bitcoin can only be mined now at giant factories and houses with supercomputers. This is because the Bitcoin network has grown insanely and takes huge computer warehouses to make mining possible.
The first mini bubble of Bitcoin was not mentioned in any news before, but it was recorded in a forum where cryptocurrency enthusiasts hang out. Its first price spike is $220. No one expected Bitcoin to cross multi-trillion-dollar valuation, but now, what seems to be impossible is taking place.
In the last 12 months of 2021, Bitcoin’s price has been spiking higher than ever. Although the pandemic is truly an unfortunate event, we cannot deny that we wouldn’t be seeing cryptocurrency boom now if it wasn’t for the pandemic.
The pre-pandemic price of Bitcoin is at $7,000 and even falls off to $3,400. Guess we can only envy people who bought it at such discounted price back then. The returns they have made are massive!
But let’s stop with all these segues and find out the reason why Bitcoin hasn’t crashed just yet.
Are cryptocurrencies in a bubble?
Many people believe that everything that is happening in Bitcoin and other cryptocurrencies is a bubble, and there are data that backs this claim. However, some data points out otherwise. Why would Bitcoin pop out when a piece of news broke out saying that El Salvador’s president plans to build up a Bitcoin City and raise $1 billion worth of Bitcoin bond.
In order to put this dream into a reality, El Salvador’s government has to raise money, which would only be possible through selling Bitcoin bonds. This plan was formulated to battle against the country’s crisis for several years now.
The news claimed that the Bitcoin City project could begin anytime soon in 2022. Despite the fact that the country is struggling economically, the talks about the project are still making the headlines, driving people’s interest and faith in the bright future of Bitcoin.
The fact that a country sees through its future by building a Bitcoin City, you know that Bitcoin isn’t going anywhere anytime soon. Yet, this expected project isn’t the only thing that has been keeping Bitcoin’s price at $50K.
Tim Cook, Apple’s current CEO, has made a statement that he has cryptocurrency holdings. Although he didn’t specifically mention that it was Bitcoin since it is the first thing that comes to mind when investing in crypto, we can make a guess that it’s what he is holding.
Come to think of it. If a company CEO is so exposed to cryptocurrencies, there’s a big chance that the entire company is looking into the possibility of adopting it.
No direct statements were made that Apple is investing in crypto, though. But seeing how they are seriously exploring the crypto space; it would just be a matter of time before they get into the game.
Another giant company that has might have been darting into cryptocurrencies is Amazon. The tech-leviathan has recently posted a digital currency and blockchain expert job ad to join their payment acceptance and customer assistance team.
Amazon seems to have kicked off its venture into cryptocurrencies. The very moment that such a goliath-sized company gets into the crypto game, then it’s over! There will be no going back. Cryptos are here to stay.
What’s more surprising than this is that JP Morgan’s CEO, the face of Wall Street, Jamie Dimon, who has been blasting Bitcoin ‘valueless,’ just set a new price target for cryptocurrencies. The fact that Dimon admitted that Bitcoin’s price would spike up means that the status quo is accepting crypto.
The adoption of artificial and virtual reality also has something to do with cryptocurrencies. How are the two related, you might ask?
The Adoption of Virtual and Artificial Reality
We have been working in building the virtual world since the invention of the internet. The internet gets used solely for sending emails at its early stages, and then it moves from attending the meeting through Zoom to online shopping.
The next transition of the internet is projected to be the Metaverse, a virtual world where anything is possible. Partly, we are already living in the VR world. It may sound to be a bit too futuristic for some, but the world has been moving in this direction for more than two decades now. The pandemic pushed this project to move faster.
Facebook already rebranded itself as Meta (short for “Metaverse“), signaling the commencement of the world’s transition to the virtual world. We are not far from reality. In fact, Apple’s upcoming product is Virtual Reality (VR) product.
In the virtual world, we are building, there should be items that individuals should possess, just like in the real world— this is where NFTs (non-fungible tokens) comes into the scene. And the cryptocurrencies would probably be the de facto money in the virtual world.
However, everything won’t surely be sunshine and rainbows in fulfilling this project. Cryptocurrencies have been going down since the first month of 2022, declining around half their value. No one knows how further this will depreciate.
Since the pandemic, many people have been waiting for a cryptocurrency crash, and like what we have mentioned earlier, there are also good arguments for why it would happen.
Why would cryptocurrencies crash?
It’s not a secret that cryptocurrencies dramatically rose because of people’s access to cheap money. There are periods of recessions and booms, and in the past years, we have been in the boom period. And it would probably last for, at least, another year.
Too much money gets injected into the economy during such a period and crashes rarely happen. This is especially true for Bitcoin since it has a massive, dedicated network. But once the boom period is over, it becomes relatively hard to know what scary thing could happen in the economy.
After the greatest recession that took place in 2008, the economic expansion lasted until 2020. Data gathered has shown that the expansion already slowed down back in 2016, but still, it somehow stabilized in that stage.
The crash isn’t expected to happen to just Bitcoin and other cryptocurrencies but to the overall economy. But perhaps, not now in 2022.
As the Fed increases the interest rates, the cash supply will keep declining in the economy, so ordinary people will have less to spend. This will also impact the demand for Bitcoin and other cryptocurrencies.
You have to pay keen attention to interest rates because they are the key factors that significantly influence the economy— this is what most successful investors do.
Yet, if Bitcoin indeed crashes, it won’t be so much of a crash since major corporations are adopting cryptocurrencies.
