Bitcoin has skyrocketed for much of 2021, helped by the likes of Tesla
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The price of bitcoin, hitting an all-time high of nearly $70,000 per bitcoin in November, has since plummeted, losing around 40% of its value and wiping $1 trillion from the combined crypto market.
Now, Wall Street giant Fidelity has said other countries and even a central bank could follow El Salvador and Tesla into bitcoin this year, predicting that those who buy bitcoin when the price is low “will be more competitive than their peers”.
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“There is a very high-stakes game theory here that if bitcoin adoption increases, countries securing bitcoin today will be better off than their peers,” wrote Fidelity analysts Chris Kuiper and Jack Neureuter in a note, adding that they “wouldn’t be surprised to see other sovereign nation states acquiring bitcoin in 2022 and perhaps even seeing a central bank make an acquisition.”
“I agree with Fidelity, of course, but still amazing to read this about the bitcoin adoption game theory in such a mainstream financial report,” said bitcoin advocate Alex Gladstein, chief strategy officer at the Human Rights Foundation, said via Twitter.
In September, El Salvador made bitcoin its official currency alongside the US dollar and began buying bitcoin. This year, the country announced it would buy an additional $500 million worth of bitcoin, funded by issuing token bonds worth $1 billion, and plans to create an ultra-tax “Bitcoin City.” weak.
Politicians in other countries are watching the bitcoin experiment 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 he plans to allocate 1% of the city’s cash reserves to cryptocurrencies while in the United States, Miami Mayor Francis Suarez said the last year he wanted to put some of the city’s treasury in bitcoin.
Meanwhile, Elon Musk’s Tesla has followed enterprise software company MicroStrategy
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“Even if other countries do not believe in the investment thesis or adoption of bitcoin, they will be forced to acquire it as a form of insurance,” Fidelity analysts wrote. “In other words, a small cost can be paid today as a hedge against a potentially much higher cost in years to come.”
The price of bitcoin has jumped nearly 400% since that time two years ago, with the combined crypto market growing from around $200 billion to $2 trillion. However, the price of bitcoin remains highly volatile, twice in the past year it has fallen 40% from its highs even as Wall Street analysts predict an increase in bitcoin and crypto adoption.
Bitcoin and Cryptocurrencies Expected to Increase Acceptance by Major Investors and Businesses This Year, JPMorgan
Bitcoin is “uniquely designed as a modern store of value, and the solid design has helped boost bitcoin’s trust and value,” Worthington wrote, predicting that 2022 will be “the year of the blockchain bridge (resulting in more great interoperability of various chains) or the year of financial tokenization.”