What's Next For Bitcoin?

The year 2021 was an incredibly busy year for Bitcoin, but it also was a year where it cemented its own legacy. This was the year that people began to wake up to what bitcoin really is and why they need to own it.  We began the year fresh off reaching a new all-time high price.  Then soon after, Tesla entered the game and put bitcoin on their balance sheet.  This alone would have been the biggest news story for bitcoin during most years, but this wasn't a normal year.  Fresh off the heels of that Tesla announcement, bitcoin would push its price upwards even further, reaching $64k, another record.  But volatility does not only move upwards, it goes downwards as well.  What came next was a summer of bearishness for many, with the price dipping all the way down to $28k.  This movement was caused by an unprecedented amount of FUD that was thrown towards bitcoin.  FUD so strong that in most years would have meant the end of the bull run and sent us into a deep bear market market.  Or potentially even worse, threatening the existence of bitcoin itself.  

Things such as China banning it, the great mining exodus from that same country, and the threat of US regulations. But, none of that could keep it down forever.  And then El Salvador announced that they would be making bitcoin their legal tender, possibly the most important news since the genesis of bitcoin itself.  They would then follow that up announcing they they will be building their own bitcoin city.  While those were perhaps the largest stories of the year.  There were two things that were happening behind-the-scenes; that were potentially the most important.  The first of those was the incredible increase of adoption of Lightning, bitcoin's layer 2.  I have said in previous articles, but at the beginning of 2021, many people had considered Lightning to be an abandoned project that would never reach the potential of its initial promise.  But now, it is being used to onboard and power an entire country.  Even though El Salvador's population is smaller compared to other countries, this is the story of the year in my opinion.  Finally, a lot of people didn't even realize that the bitcoin protocol was upgraded last year, but it was.  In fact, the Taproot was the biggest update in years for bitcoin.  While there is no change that you will immediately notice, like you could see happen with EIP 1559 for Ethereum.  On the contrary, these upgrades were small things that set the foundation for more in the future.  While smart contracts are not currently possible on bitcoin to do on the same level as other smart contract chains.  Taproot potentially is the first step that may make those more of a reality in the future.

It is safe to say that a lot happened in 2021, so much so that it was challenging to keep up to date on everything. But we are a generation of people who are always thinking what is next.  So what is next for bitcoin? Let's talk about it.

A lot of what happens with bitcoin's price currently depends heavily on what is happening in relation to Covid.  It was the shock that cut bitcoin's price in half during March 2020, but it also finally gave bitcoin's purpose real meaning.  Because of that, bitcoin mooned to a new all-time high, and would go up 3x from that point. But each time there is a new variant or some time of fear event, this also brings bitcoin's price back down.  If it isn't the virus, there are other side-effects, such as the inflation caused from the whole situation.  Again, this is finally making bitcoin's use-case legitimate in the mainstream's mind.  If this inflation situation continues to be dragged out, which I believe it will, then bitcoin needs to do only one thing.  Survive.  With each block that is mined, bitcoin becomes stronger and stronger.  Every day that you wake up and bitcoin still exists, is a bullish thing.  The fiat finance world is quickly crumbling, while bitcoin is running steadily.  If that situation continues, corporations will stampede towards bitcoin.  Governments will as well.  Regular people will be the last to realize and will also get into bitcoin, but by then the price will have already exploded.  Keep a very close eye on what is happening in the financial markets.  A lot of people will be caught surprised, unprepared and it will cause panic. Bitcoin is the financial life raft that could offer relief.

The next thing that will happen is Grayscale's BTC Trust will be approved by the SEC and converted into a Spot Bitcoin ETF.  While it appears that the current application has been rejected, Grayscale has taken a completely different approach than most companies.  They have fired back at the SEC, opening the dialogue with the public.  It's a risky move, but one that will pay out heavily.  The US government has recently begun to understand just how many people are into bitcoin and cryptocurrency.  So much so, that it froze and put a halt to the infrastructure bill during the summer.  Something that shocked many.  The key point is this.  Crypto is appreciating quickly, and this means that a large amount of the countries richest people will be heavily into crypto to.  These are the people who have the power in the country.  Now, why should Grayscale's proposal be approved and a proposal by some other company.  Simply put, they are in control of the most bitcoin by far, and so it only makes sense that they would be the first to be approved.  While a futures based ETF approval sent bitcoin's price up to a record high, eventually reaching $69k.  A spot ETF would have a much greater impact.  At the very least we would see bitcoin's price double in anticipation; reaching $100k, if not more.  This will be an exciting development to keep an eye on.

Finally, there will be another country that will adopt bitcoin as legal tender.  Not every country had the perfect power set-up to move as quickly as El Salvador did.  It takes time.  Also, many countries wanted to take the wait and see approach.  Let El Salvador be the first domino to go down.  Let them experience all the bugs, hardships and learn from them.  And they have learned greatly.  As I have said before, the key take-away here is that there have been no major hiccups or bugs with the system there.  Each day you wake up, and bitcoin is still working, is a bullish day.  There are many rumors for what country will be the next country to adopt.  Rumors ranging from Tonga, Panama, Brazil and more.  Just like in the game of dominoes. Once one domino goes down, the others will fall even quicker.  We are reaching that point soon.  If things move quickly, this could be the catalyst that sends bitcoin's price to heights that we've only dreamed about.

One of the key things that I'm interested to keep an eye on during the next year is the extend duration of this bull run.  We have reached a point where this market cycle is unlike any other before.  Will the cycles be extended, but still mirror previous bull and bear cycles? Or maybe, the whole bull and bear cycle theory is an idea that we will need to forget about.  Treating the market in a way similar to how we treat the stock market.  One thing is for certain.  I continue to be extremely bullish in bitcoin and what will happen in the future.  If in doubt, zoom out.  Also, the next bitcoin halving is not so far away anymore.  Time goes fast and it will come faster than you think.  We live in bullish times.

How about you? What do you think will happen next year for bitcoin?

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As always, thank you for reading!