2022 has not been the best start to the year for digital currencies; the valuation of Bitcoin and other digital money does not depend on a Central Bank that establishes its value.
It works under the decentralized platform Blockchain, where the miners are in charge of doing the necessary computations to generate the transaction blocks. More here about the bitcoin price in the present.
Bitcoin maintains its value through a set of protocols decrypted by the miners. On several occasions, external agents have influenced its valuation without necessarily being macroeconomic factors.
Scenarios that make digital currencies go up and down
Variations in the price of digital assets are characteristic of financial instruments, just as in the traditional market, where stocks and bonds tend to rise and fall in price.
In the digital market, the aspects that influence the value of digital currencies are usually different, which is why various scenarios are generated where the rises and falls in price can be observed.
- Halving Reduction :
It refers to the decrease in the creation rate of Bitcoin or other digital currencies. The miners are mainly affected since their profit commission is reduced to 50%.
- Availability of cryptocurrencies:
Due to the high costs in terms of electricity consumption and the fact that mining equipment has become more specialized, miners feel discouraged from mining. There is a risk that Bitcoin will significantly decrease its price since no units will be generated.
- Valuation of digital currencies:
Suppose the balance between supply and demand is broken. In that case, confidence in the market is lost, where excessive sales are usually observed due to the fear of losing the capital invested.
- Market Sentiment:
It depends on the investor’s purposes with the digital currency units acquired; in some cases, it can be to make payments, purchase, sell and exchange, or simply storage until its value is multiplied.
The unpredictable valuations of cryptocurrencies make this market highly volatile, but this does not make it any less competitive than the traditional financial market.
Forecasts for Bitcoin in the remainder of 2022
We are facing a digital currency that has shown that, over the years, its adoption has been increasing, which leads to the conclusion that it may continue to maintain this trend.
Although the critical moments that 2022 has experienced are not the only stage in the life of Bitcoin where it has touched lows low enough to think of its disappearance.
On the contrary, it has shown that it has recovered, and when it has, it has been with greater power and, therefore, valuation; it is assumed that after the downward trend that Bitcoin is experiencing, it can go upwards.
This digital currency has proven to be one of the most attractive digital assets for investors, especially in the long term.
Although there are many forecasts, some optimistic, others conservative, the fact is that not all investors tend to withstand the pressure of the bear market; it is there where they tend to sell and stop storing, pressured by the fear of losing what they have worked so hard to save.
We are witnessing the price variations that Bitcoin has gone through, but this will not be forever; one of the closest forecasts is that by the end of this year, Bitcoin can reach 50,000 dollars per unit.
Repetitive cycles in cryptocurrencies
The cycles of cryptocurrencies have been defined as follows: accumulation stage, greed stage, distribution stage, and fear stage; all these stages usually happen constantly; once the trend changes, it is already known what the movement is that follows.
That is why many crypto market analysts knew that this crisis was coming; it was not something unexpected, and the graphs and the life cycle of Bitcoin prove it.
All those who have specialized in this market know that it is necessary to buy in the accumulation stage, store and maintain until the distribution stage and then proceed to the sale.
The cycles are repeated whether in 100 years or one; the reality is that various events usually occur that promote the creation of bubbles, and that is where the market is taken by surprise.
Bitcoin has shown the type of digital currency it is and its strengths even in the face of a volatile and unpredictable digital financial market.
What is certain is that it will continue to give something to talk about. Still, the latest news and relevant data regarding this digital currency.