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Might Bitcoin eventually reach $1 million?

Key points

  • Some believe Bitcoin will be the digital currency of the future because of the role it can play in payments, international remittances, and more.
  • Bitcoin adoption reached a tipping point in 2021, and more and more financial institutions are looking for ways to engage with crypto.
  • Cryptocurrency is still a high-risk investment and investors need to tread carefully.

Bitcoin (BTC) and other top cryptocurrencies have had a rough ride so far this year as economic and geopolitical uncertainty hammered the whole crypto market. The price of Bitcoin has more than halved in the past six months and its price recently hit a 10-month low.

When prices are plummeting, one way to avoid panic selling is to remind yourself of the original reasons you bought a particular asset. The trouble is that when times get tough, it’s easy to forget why you thought something would be a good investment. That may be how you’re feeling right now. Or perhaps you’re considering buying Bitcoin at recent lows. Either way, read on for a few positive facts about the leading cryptocurrency.

1. Crypto adoption continues apace

According to a report from top crypto exchange Gemini, cryptocurrency reached a tipping point in 2021. The authors argue it evolved from what many considered a niche investment into a global, established asset class. Gemini also said venture capitalists are putting a lot of money into crypto. “Venture capital investment exceeded $30 billion in crypto and blockchain startups, with more than $10.5 billion in investment in Q4 2021 alone.”

Many major financial institutions are also exploring crypto. Most recently, Fidelity, the biggest retirement plan provider in the U.S., said it would allow investors to put Bitcoin in their 401(k) accounts. Big institutions such as J.P. Morgan and Goldman Sachs are engaging with the crypto market in different ways. Both Visa and Mastercard have launched crypto credit or debit cards. And as the regulatory environment becomes clearer, we can expect even more institutional interest.

El Salvador was the first country to adopt Bitcoin as legal tender, and the jury’s still out on how successful the initiative will be. However, it’s still incredible that a digital currency invented around 13 years ago is now legal tender. And it isn’t only El Salvador. The Central African Republic has also recently approved Bitcoin as legal tender. 

3. It could be the digital currency of the future

One of the appeals of Bitcoin and crypto is that it removes the friction from payments, especially international transfers. There are still issues in terms of things like transaction fees and scalability. However, according to Ark Invest, Bitcoin’s cumulative transfer volume increased by over 460% last year. A report entitled Big Ideas 2022, showed that Bitcoin settled $13.1 trillion in 2021, surpassing Visa’s payments volume.

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Ark Invest’s study also highlighted several sectors where Bitcoin could take market share from traditional activities. These include international remittances, being a currency in emerging markets, institutional investments, and acting as a form of digital gold. The research estimates that if Bitcoin can make significant progress in each of these use cases, its price could exceed $1 million by 2030.

4. Bitcoin’s technical development continues 

Even though Bitcoin is not run by a centralized organization, it continues to develop. There’s a small army of developers working to improve the network, fix bugs and security issues, and improve functionality. For example, last year Bitcoin implemented a major upgrade called Taproot to improve privacy, scalability, and security. Another big step is the development of the Lightning Network, a layer 2 solution for Bitcoin that reduces costs and improves speed. 

Bottom line

For all the positives, there are still many reasons to be careful when investing in Bitcoin and cryptocurrency. Recent months have shown that this is a highly speculative and volatile asset. It is still a relatively new industry and there are a lot of things we don’t know about how it will evolve. For example we don’t know what impact increased regulation will have, or how strict that regulation will be.

Plus, there’s no guarantee Bitcoin will achieve the scenarios outlined in the Ark Invest report. There’s a chance Bitcoin’s value could reach $1 million, as the Ark team suggests. But even if you are convinced it will happen, it’s still important to prepare for the possibility the crypto market could collapse completely. Only invest money you can afford to lose and make sure Bitcoin is part of a balanced investment portfolio. That way you’ll benefit from any gains but won’t be derailed if things don’t go as hoped.

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