As of October 2020, each bitcoin was worth $ 10,544. In April 2021, the crypto-currency star reached as high as $ 62,000. In seven months, investing in this instrument yielded 488% returns, but it did not stop there. By November, it had reached $ 68,990 and there was talk of $ 100,000. In the air, the certainty was that the biggest mistake was to miss the opportunity to buy cryptocurrencies.
The bullish momentum stopped in November and since then we have seen a huge correction of more than 50 percent. On January 24, it dropped to below $ 33,000 and the day after Black Monday, there was a breather that did not calm doubts: What’s next?
Winter is coming, cryptocurrency market chroniclers tell us. In this sense, it is noted that they know Game of Thrones, but also that they are aware of what happened at the end of 2017 and the beginning of 2018, when the price of bitcoin fell by more than 80% and to $ 3,100 left. It was a winter that lasted more than a year for the currency invented by a character no one has seen yet, the mythological Satoshi Nakamoto.
Winter in the universe of cryptocurrencies means a brutal drop in price and a drastic reduction in the number of operations. That did not happen. The interest of some investors is still there, as well illustrated by Salvadoran President Nayib Bukele, who this week announced the acquisition of more bitcoins because he feels or thinks the price drop is a great investment opportunity.
Will there be a setback or winter? If we take 2018 as a reference, more declines will be missing to equal the 80% collapse experienced in that year. The next resistance is at $ 30,000 and from there there are several steps: $ 25,000, $ 20,000 …
2022 is not 2018 when we talk about cryptocurrencies. The market has developed a lot, it has grown quantitatively and qualitatively. It now has the participation of many financial institutions, in addition to hundreds of thousands or millions of investors. Fall means many things, among them it is an opportunity to clean up something that has grown with the speed and characteristics of a crop.
Bitcoin and cryptocurrencies are no longer a novelty. There is now a better understanding of the opportunities and risks that these creations represent. The myth that it is a kind of digital gold, an almost certain stock value in times of uncertainty and inflation, is quickly dispelled. Due to its behavior in the market, it is an option for investors who have the stomach and the portfolio to resist sudden movements in value.
Cryptocurrencies have become an entelechie worth between one and two trillion dollars. It is much larger than the GDP of Greece, Argentina, Portugal, Mexico or Spain. This volume and the way they work implies a risk to the financial stability of the world, or at least of some regions. They are also a challenge to the State and the implementation of monetary policy. Something that is hard to tolerate for some governments. In September, the ban on its exploitation and use was enacted in China and this week in Russia. The United States is expected to announce in February the guidelines for its digital currency policy.
There will be days of turmoil for digital currencies. Maybe winter is coming. Nobody knows if it will be at $ 12,000 or back at $ 69,000 by the middle of 2022. Elon Musk can take this risk and put another adrenaline rush into his life. El Salvador no, not even thousands of people who were interested in this phenomenon and placed their heritage there. What will happen in the real world if this virtual bubble bursts?
General Editor-in-Chief of El Economista
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Degree in Economics from the University of Guadalajara. He studied Master of Journalism in El País, at the Autonomous University of Madrid in 1994, and a specialization in economic journalism at Columbia University in New York. He was a reporter, business editor and editorial director of the Guadalajara newspaper PÚBLICO, and worked for the newspapers Siglo 21 and Milenio.
He specializes in economic journalism and investigative journalism, and has conducted professional residencies at Cinco Días in Madrid and San Antonio Express News, in San Antonio, Texas.
Reference-www.eleconomista.com.mx