Interest in buying bitcoin rose sharply at the beginning of last year, when its price rose above $ 30,000, ie at a current exchange rate of over 650,000 crowns. In a single month, people bought cryptocurrencies for half a billion crowns. In the first half of the year, the volume of trades exceeded three billion crowns. In the second half of the year, rising price growth slowed.
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“Bitcoin and other cryptocurrencies experienced a significant growth year last year. The increase in prices and volumes was due, among other things, to the fact that large players showed interest in investing. This year’s development will depend, among other things, on rising inflation and regulatory efforts in the crypt market in individual countries, ”said Bit.plus Director Martin Stránský.
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Musk i Salvador
Interest in cryptocurrencies during the year was influenced, for example, by Tesla owner Elon Musek, the acceptance of bitcoin as the official currency in El Salvador, or, conversely, restrictions on trade with it in China or India. The launch of the ProShares fund, which facilitated investments in cryptocurrencies, also had a positive effect last autumn.
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Last year, the price of bitcoin rose from a record $ 29,000 in November to a record $ 68,600, or almost CZK 1.5 million. At the end of the year, however, it fell to about $ 48,000, and after reports from the US Federal Reserve and riots in Kazakhstan, it fell further to $ 41,000 in January. Ethereum grew nearly 400 percent to $ 3,800 last year. At the beginning of the year, its exchange rate followed bitcoin and fell to $ 3,100.
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According to Wood & Company analyst Vojtěch Boháč, the volume of cryptocurrency trades that benefited from the media attention they received every time bitcoin overcame an important target last year. The approval of the first bitcoin ETF (exchange traded fund) also had an impact, which facilitated the purchase of bitcoin and expanded the circle of potential bidders. Higher inflation probably also had a share in above-average volumes.
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“However, people who think of cryptocurrencies as an anti-inflationary tool should be aware of the relatively high volatility of cryptocurrency prices. For example, in 2021, the value of bitcoin ranged in a wide range between approximately $ 30,000 and $ 69,000, in which it fluctuated and large increases alternated with large declines, ”he added.
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Growth has attracted investors
According to Cyrrus portfolio manager Tomáš Pfeiler, the growth of cryptocurrencies has attracted a number of investors with the prospect of getting rich quick. “The question remains whether last year’s interest will continue. We see that central banks are starting to tighten monetary policy. In such an environment, cryptocurrencies will no longer demonstrate last year’s miraculous appreciation. Less attractive returns may discourage many investors from this asset class. It is on the cryptocurrencies that a number of players are active, who last year got used to double-digit evaluation in a number of weeks. Smaller movements on the crypt may lead these speculators to rotate into a different asset class, ”he added.
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“It is still good to keep in mind that bitcoin and cryptocurrencies in general should have a retail investor looking to build their wealth, instead of a speculative addition to a strong portfolio of ETFs and quality bonds,” said Imperium Finance CEO Vaclav Kosacek.
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Bitcoins and other virtual currencies
There are many virtual currencies. One of the oldest and currently most popular are the so-called bitcoins. They were established in 2009, but have enjoyed greater popularity in recent years. This currency was designed so that it could not be influenced by any government or central bank.
Cyber coins are “minting” a network of computers with specialized software programmed to release new coins at a steady but declining pace. The number of coins in circulation is expected to reach 21 million in the end, which is to be around 2140.
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