2022 has arrived and with it its share of predictions regarding Bitcoin and the cryptocurrency market in general. The word everyone has on their lips at the start of the year is of course the word “Inflation”.

Inflation is simply the decline in the purchasing power of a currency over time. This is reflected in particular by the increase in the average price level of goods and services. Currently, in France, the inflation rate is stabilized around 2.8%, in particular with the increase in the price of energy and the successive lockdowns which have caused disruptions in the supply chains of raw materials.

You therefore need 1,015 euros in 2022 to have the same purchasing power as with 1,000 euros in 2021! I invite you to play with this calculator to better understand the idea.

Suddenly some wonder if Bitcoin might not be, like gold, a good way to store value and limit the impact of inflation. The only thing is, Bitcoin and cryptocurrencies are very volatile and can lose a lot of their value in a few days. It is not uncommon for Bitcoin to lose up to 20% of its value within a few days. On a daily or short-term basis, this volatility makes things difficult and does not protect against inflation. That said if we think in terms of assets, Bitcoin and the global crypto market have seen their value increase much more than the rate of inflation in recent years.https://www.litebit.eu/fr/widget/bitcoin?referrer=26468&buttonText=Acheter%20Bitcoin

If you want to try your hand at cryptocurrency and you are a French resident, you can register on Litebit. Once your account is validated, you will receive, after a few days, 20 LiteBit credits worth € 20 for free in your account in order to start using the platform.

Regarding the price of Bitcoin, as always, we have the right to everything and its opposite. Some are announcing a $ 100,000 Bitcoin before the summer according to the Stock To Flow model, even if in 2021, this model has shown its limits. And others like Carol Alexander (professor of finance at the University of Sussex in Switzerland) believe that BTC will drop back to $ 10,000. I would remind you that $ 10,000 was its price at the start of 2020.

Reading the future is not possible so we’ll see how it goes. However, we have seen it this year with the adoption of cryptocurrencies by investment funds, private companies and even countries like El Salvador, barring any unforeseen circumstances, this phenomenon is likely to continue in 2022, even if the price drops. It would be for these states, the good opportunity to return there cheaper.

However, it should not be forgotten that all markets, with cryptocurrency in the lead, benefit from the generous policies of the FED and the ECB already in place for a long time and reinforced for two years to get through the Covid crisis by stimulating the economy. According to what some specialists in macroeconomics explain, this magic money from central banks that was supposed to benefit the real economy was actually used to fuel the stock market and cryptocurrencies. The thing is, magic and unlimited money can only last for a while. The increase in the money supply leading to the rise in prices (and we can see it well at the moment), this causes this phenomenon of inflation that I described to you above. And who says inflation says decrease in the purchasing power of people, crisis, and fighting in the streets. Therefore, the ECB and the FED have no other choice but to reduce the arrival of liquidity in the markets, which will directly reduce the demand for equities and cryptocurrencies. Unless they decide to let inflation continue … We don’t know.

Beyond cryptocurrencies and their prices, there are still some very innovative projects that seem to be on track to impact our lives, like the Internet and the smartphone have done. Whether these have a positive or negative impact on the global economy, it is certain that the current financial system will be disrupted by or thanks to cryptos. No more need for banks that centralize financial exchanges, no regulatory authority, enormous volatility, rampant adoption especially in developing countries, decentralized governance, trust, transparency, transaction costs ridiculous (yes, I know except for Ethereum, but that will change with ETH 2.0)… etc.

Cryptos have everything to succeed and permanently modify the current financial system. El Salvador even adopted Bitcoin as its official currency in 2021. It’s a safe bet that other countries will follow suit this year, freeing themselves from the dollar and central banks. MicroStrategy and its CEO Michaël Saylor are also among the companies which in 2021 invested heavily in Bitcoin and we started again in early 2022 by buying Bitcoin again for $ 94 million. If the value of the asset continues to rise, there is a good chance that MicroStrategy will become much richer in a few years than Google or Apple. All without really producing wealth (for the moment) which is obviously a shame.

It is also very likely that Tesla, who had adopted Bitcoin before retracting, decides to return to it. At the moment, they are beating around the bush with the likely arrival of DogeCoin as a payment method for certain Tesla products or services. We’ll see what Elon Musk has in store for us.

Regardless, 2022 is going to be exciting if you’re interested in cryptocurrencies, NFTs, and decentralized finance.

It remains to be seen whether the current players (banks, countries, companies, legislation… as well as individuals) will succeed in adapting quickly to this change which is happening much faster than one might think.

Source: korben.info/articles/cryptomonnaies-2022

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