Forex Analysis & Reviews: 04.01.2022 - Why are Bitcoin bulls...

04.01.2022 01:30 PM

Why are Bitcoin bulls waiting for the level of $ 100,000?

Cryptocurrencies boomed last year, but the reduction in Bitcoin (BTC-USD) spending at the end of the year left many investors unsure that they would make the same profit in the new year.

Bitcoin, trading around $ 46,360, has fallen 8% since last week and is 31% below the all-time high reached in November when it traded around $69,000. So, while hopes for Bitcoin reaching $ 100,000 in the short term have not been fulfilled, bulls remain calm, and some are not afraid to double their forecasts.

On Monday, George Tung of Yahoo Finance said that there is some correction in the short term for Bitcoin. He added that inflation will be a continuing problem in the long term, and Bitcoin is currently seen as the best hedge against inflation.

The chief strategist at Bitcoin software company Blockstream, Samson Mow, was among those who predicted Bitcoin's move to six figures. He insists that a high mark is still possible.

According to him, $ 100,000 will be hit in the first half of the year.

He also acknowledged that Bitcoin will continue to operate as a risk-sensitive asset in the short term, fluctuating depending on the central bank and government policies and broader shifts in the stock market.

His comments follow a similar prediction made by Salvadorian President Nayib Bukele, who made the same statement over the weekend.

According to Bukele, two more countries will accept Bitcoin as legal tender this year.

Blockstream and El Salvador recently made headlines after Bukele and Mow announced a partnership offering so-called "volcanic bonds."

But while the bond is not yet available, Mow said Blockstream is working with a number of brokers. The other half of this supply of 10-year US dollar-denominated bonds will be converted to bitcoins. The 10-year bond, which matures in 2032, has a 6.5% coupon.

El Salvador's bond placement followed a warning from the International Monetary Fund (IMF) back in June. It was reported that the conversion of bitcoins into legal tender exposes the country to significant volatility risks. But like Bukele, Mow hinted at the possibility that other countries, especially those engaged in bitcoin mining, will follow El Salvador's move to make it legal tender this 2022.

According to a study compiled by the Cambridge Bitcoin Electricity Consumption Index (CBECI), while the Chinese government banned cryptocurrency mining in June 2021, the industry has re-emerged in other countries including Canada, Iran, Germany, Malaysia, and the United States,).

It is possible to track how Bitcoin is used and who mines it, but the process is imperfect. The asset's payment rails allow observers to track the movement of funds from different wallets. Here, determining who owns a particular wallet address – be it a sovereign nation, a corporation, or an individual, remains more an art than a science.

A recent article published by the National Bureau of Economic Research (NBER) sheds light on who exactly owns Bitcoin tokens. The individual holdings were found to be "highly concentrated," with the largest 1,000 investors controlling 3 million, or about 20% of all bitcoins in circulation.

However, some bitcoin investors dispute these findings, although analysis by market research firm Glassnode showed that the growing number of large traders indicates an institutional interest in the cryptocurrency.

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