According to many reports Bitcoin may experience significant growth
Bitcoin, the world’s largest and most popular cryptocurrency, has been experiencing a volatile and bearish trend in the past few weeks. After reaching an all-time high of $68,770 on Nov 10, 2021, the BTC price has dropped by more than 40%, trading below $41,000 as of Jan 22, 2024.
One of the main drivers of the Bitcoin price is the supply and demand balance. Bitcoin has a fixed supply of 21 million coins, of which about 19.6 million have been mined and circulated. This means that the remaining supply is becoming scarcer and more valuable over time, creating a deflationary effect.
However, the demand for Bitcoin is influenced by various factors, such as the adoption rate, the innovation, the regulation, the competition, and the speculation. These factors can have a positive or negative impact on the Bitcoin price, depending on the market sentiment and expectations.
Some of the recent events that have affected the demand for Bitcoin are:
• The launch of the first Bitcoin exchange-traded fund (ETF) in the US by ProShares on Oct 19, 2021. This was seen as a major milestone for the mainstream acceptance and institutional adoption of Bitcoin, as it provided a regulated and convenient way for investors to gain exposure to the cryptocurrency. The Bitcoin ETF attracted more than $1 billion in assets under management in its first week of trading, boosting the Bitcoin price to new highs.
• The crackdown on cryptocurrency mining and trading in China, which started in May 2021 and intensified in September 2021. China, which used to be the dominant player in the Bitcoin mining industry, accounting for more than 50% of the global hash rate, banned all crypto-related activities in the country, citing environmental and financial risks. This caused a massive disruption and migration of the Bitcoin mining operations, as well as a loss of liquidity and demand from the Chinese market. The Bitcoin price plunged by more than 20% in September 2021, following the news of the Chinese ban.
• The emergence and growth of alternative cryptocurrencies, especially those based on smart contracts and decentralized applications, such as Ethereum, Solana, Cardano, and Polkadot. These cryptocurrencies offer more functionality, scalability, and innovation than Bitcoin, attracting more developers, users, and investors. According to CoinMarketCap, the market share of Bitcoin has declined from more than 70% in January 2021 to less than 50% in January 2024, indicating a loss of dominance and competitiveness in the crypto space.