If you are a keen follower of digital currency news, you may have been following Bitcoin’s rather tumultuous fortunes over the past few years and found yourself wondering what the future holds. The cryptocurrency has been plagued by a series of catastrophes over the last few months, in particular the latest ‘crypto winter’ which was triggered by factors such as rising inflation, Covid-19, Russia’s invasion of Ukraine, and a rise in interest rates.
In June 2022, Bitcoin’s price dropped below $20,000 in the US, representing a downturn of more than 70% since its peak in November 2021. In total, Bitcoin suffered a monumental loss in value of $900 billion, a staggering figure that seems to indicate that the cryptocurrency is on its last legs. But is Bitcoin really down and out, or can it resurrect itself once again?
Could the winter end for Bitcoin?
With the drastic plunge in cryptocurrency fortunes over the past few months, experts in the US have been expressing their concerns about the riskiness of investing in these currencies. Unlike traditional banks, the companies which trade and store cryptocurrencies often do not offer robust security measures, because the legislation involving these currencies is still a work in progress.
This means that people who invest in cryptocurrencies such as Bitcoin and Ether could find themselves with nothing if the company they’ve invested with has to file for bankruptcy.
Janet Yellen, the U.S. Treasury Secretary, has been vocal about the potential problems which can be caused by Bitcoin and other forms of cryptocurrency, and stated her view that “sovereign money is the core of a well-functioning financial system.” She also cited the volatility of cryptocurrencies such as Bitcoin as being a factor that has stopped their wider adoption as a method of payment.
Could history repeat itself?
While the future may currently seem dubious for cryptocurrencies such as Bitcoin, a cursory glance over the past few years will reveal that these digital currencies have experienced previous sharp downturns – from which they have made remarkable recoveries. Bitcoin, for one, has already bounced back from its sharp decline, growing by over 25% throughout July 2022.
While Tesla may have off-loaded most of its Bitcoin shares, seemingly indicating a lack of faith, the fact remains that the future has not yet been written for the cryptocurrency. With so many factors at work in the world, each of which must have some sort of ripple effect on the US economy, it’s impossible to say which way things will go for Bitcoin. Nevertheless, with some recovery already underway, it seems likely that Bitcoin’s fortunes could still continue to rise over the coming months. However, a complete thawing of the crypto winter is impossible to predict with any certainty.
How things stand
Bitcoin and other cryptocurrencies have undeniably faced their fair share of challenges and will continue to do so in the coming years. However, more companies and brands are opening up to the use of cryptocurrency for payment, and Yellen herself said that updating the US’s “regulatory architecture” when it comes to cryptocurrency will “support US economic competitiveness”. This seems to indicate a readiness to continue to accommodate and develop the use of Bitcoin. Perhaps the future will be bright after all.