Cryptocurrencies have been the subject of much skepticism since their advent back in the early 2000s, with market leader Bitcoin dismissed early on as little more than a passing fad. At that time, few could see any practical reason to invest in it, with only a select few early adopters rushing to jump on board – but just a few years later, those same people struck it lucky when its value dramatically surged, making some amateur investors overnight millionaires.
Few could have predicted the heights to which this digital asset would climb to in the years that followed, with the majority believing its early surge to be a fluke – an inkling that appeared to be confirmed when Bitcoin’s value plunged again later on. But fast forward to today, and it has climbed to a new all-time high of $63,740 – dwarfing the early figures and making it one of the most sought-after assets on the market today.
Everyone from seasoned investors to Gen Z-ers now want a slice of the pie, with crypto trading platforms and websites like bitcoins-evolution.com reporting a dramatic surge in the number of new sign-ups over recent months. After Bitcoin made a quick recovery following its latest plunge this summer, a pattern is starting to emerge, and seems to be filling investors and would-be investors alike with confidence that its resilience means it’s here to stay.
According to experts, the revolutionary asset is set to continue its skyward trajectory until at least the second quarter of 2022, leaving those who have yet to jump on the bandwagon taking a ‘now or never’ approach and preparing to go all in. But Nigel Green, CEO and co-founder of leading financial advisory, asset management and fintech group DeVere, has warned that global inflation fears are continuing to rise alongside it.
In America, inflation rates have surged to a 31 year high, raising concerns that the Federal Reserve will raise interest rates imminently, while in the UK, they are expected to peak at four percent by the end of the year – the highest in a decade.
Mr Green says: “Prices paid by U.S. consumers jumped the most since 1990 last month, climbing a staggering 6.2 percent from a year earlier.
“This latest data out of the U.S. will only compound global fears about inflation as price pressures run hot around the world.
“Inflation in the UK could rise above 5 per cent by early next year, Euro area annual inflation is 4.1 per cent in October 2021, up from 3.4 pecent the month before, and the cost of goods leaving Chinese factories surged by another record rate last month – 13.5 per cent – and there are increasing signals that consumers are now feeling the pain.”
Inflation appears to be a global issue, with businesses continuing to increase their prices as the supply chain flounders, with bottle-necks and a shortage of workers pushing up costs – something that is expected to last until at least the second quarter of 2022.
“Against this backdrop, and amid some peaks and troughs along the way as markets never move in a straight line with traders taking profit, we can expect to see the price of Bitcoin and other major cryptocurrencies continue their skywards trajectory,” says Green.
“Bitcoin is widely regarded as a shield against inflation, mainly because of its limited supply, which is not influenced by its price.”
The ‘shield’, experts believe, will see investment in the crypto market from major institutional investors continue to grow. Their substantial capital, paired with expertise and reputational pull, will likely drive up prices even further – but just how high can they go?
Some have suggested that even before the end of 2021, we could see Bitcoin value surge as high as $100,000 – although just how far beyond this point the numbers could continue to climb into 2022 remains to be seen.
Thanks to its gravitational pull on other cryptocurrencies, we can expect to see the value of other digital assets like Ethereum – which reached an all-time high of its own just this week – also continue to climb along with it.
“In this inflationary period, Bitcoin has outperformed gold, which has been almost universally hailed as the ultimate inflation hedge – until now,” says Green.
So, could Bitcoin become the new gold in 2022? We’ll have to wait and see – but all signs point towards a prosperous future – at least in the short-term – for crypto investors. Nevertheless, it’s important to bear in mind the historic market volatility of Bitcoin and the like, and remember that nothing in the world of investing is certain, with time the only teller of what the future truly holds.
Disclaimer: Investing money carries risk, do so at your own risk and we advise people to never invest more money than they can afford to lose and to seek professional advice before doing so.