Bitcoin soared for most of 2021, with help from the likes of Tesla
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The price of bitcoin, which reached an all-time high of about $70,000 per bitcoin in November, has fallen again, losing about 40% of its value and wiping $1 trillion from the aggregate crypto market.
Now, Wall Street giant Fidelity has said that other countries and even the central bank could follow El Salvador and Tesla in bitcoin this year — and predicted those who buy bitcoin while the price is low “will be better off competitively than their peers.”
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“There is a high-stakes game theory at play here that if bitcoin adoption increases, countries that secure some bitcoin today would be better off competitively than their peers,” Fidelity analysts Chris Kuiper and Jack Neureuter wrote in a note. We wouldn’t be surprised to see other sovereign nation states acquire bitcoin in 2022 and maybe even see a central bank make an acquisition.”
“I agree with Fidelity, of course, but it’s still amazing to read this about Bitcoin adoption game theory in such a mainstream financial report,” Bitcoin advocate Alex Gladstein, chief strategy officer at the Human Rights Foundation, said. He said via Twitter.
In September, El Salvador made bitcoin its official currency along with the US dollar and started buying bitcoin. This year, the country said it will buy another $500 million worth of bitcoin, funded by the issuance of $1 billion in token bonds, and plan to create an ultra-low tax “Bitcoin City.”
Politicians in other countries are watching Bitcoin’s trial in El Salvador for signs of success, and some have said they would consider a similar move if it pays off.
This week, the mayor of Rio de Janeiro reportedly said that he plans to allocate 1% of the city’s treasury reserves to cryptocurrency, while in the United States, the mayor of Miami, Francis Suarez, said last year that he wanted to put some of the city’s treasury into bitcoin. .
Meanwhile, Elon Musk’s Tesla was followed by the business software company MicroStrategy
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“Even if other countries don’t believe in the investment thesis or embrace bitcoin, they will have to take out some as a form of insurance,” Fidelity analysts wrote. “In other words, a small cost can be paid today as a hedge compared to a much larger potential cost in years to come.”
The price of Bitcoin has risen nearly 400% since this time two years ago, with the combined cryptocurrency market rising from around $200 billion to $2 trillion. However, the price of bitcoin remains highly volatile, having collapsed twice in the last year by 40% from its highs even as Wall Street analysts predicted increased adoption of bitcoin and cryptocurrencies.
Bitcoin and Cryptocurrencies Are Set to Receive Greater Acceptance from Major Investors and Firms This Year, JPMorgan
Worthington writes that bitcoin is “well-designed as a modern store of value, and robust design has increased trust and value in bitcoin,” predicting that 2022 will be “the year of the blockchain bridge (leading to greater interoperability of bitcoin and different chains).” Or the year of the financial coding.”