Bitcoin faces uncertain 2022 after record year
The price of bitcoin hit record highs in 2021 thanks to support from traditional finance, but cryptocurrency specialists are struggling to predict next year’s outcome for the volatile sector.
Having more than trebled in value to $60,000 between December 2020 and April, bitcoin has lost some shine to trade at under $50,000 heading into the new year, according to AFP.
“The current choppy and directionless price action with a possibility of further pressure to the downside has introduced a lot of uncertainty to the digital asset market,” noted Loukas Lagoudis, executive director at cryptocurrency investment fund ARK36.
He added, however, that “sustained adoption of digital assets by institutional investors and their further integration into the legacy financial systems will be the main drivers of growth of the crypto space” during 2022.
Bitcoin’s rise in 2021 coincided with Wall Street’s growing appetite for cryptocurrency.
The record high in April occurred with the stock market debut of cryptocurrency exchange Coinbase.
October’s peak above $66,000 followed the launch of a bitcoin futures exchange-traded fund (ETF), or type of financial instrument, on the New York Stock Exchange.
Tesla boss Elon Musk helped the market rise - and fall - with controversial tweets about cryptocurrencies. The move by El Salvador in September to make bitcoin a legal tender also made an impression.
But pressure has come from China’s crackdown on the trading and mining of cryptocurrencies, while the risk of wider regulatory action, from the likes of Europe and the United States, weighs on bitcoin.
According to the specialised site CoinGecko, the cryptocurrency sector has a market value totalling $2.36 trillion, with bitcoin worth a combined $900 billion.
The Turkish Parliament will soon start debating a draft law that aims to regulate cryptocurrency markets.
According to the draft prepared by the lawmakers of the ruling Justice and Development Party (AKP), natural and legal persons who are found to be operating as a crypto asset service provider without obtaining permission will be sentenced to imprisonment from three to five years.
More than 5 million people in Turkey have cryptocurrency platform accounts. Mustafa Elitaş and Mahir Ünal, leaders of AKP’s parliamentary group, met with cryptocurrency platform representatives at the meeting hall of the planning and budget commission this week.
Senior officials from the Treasury and Finance Ministry, the Banking Regulation and Supervision Agency (BDDK), the Financial Crimes Investigation Board (MASAK) and the Turkish Central Bank also attended the meeting.
On Dec. 27, MASAK fined Binance, or BN Teknoloji, 8 million Turkish Liras (nearly $634,000) in a first move against a cryptocurrency platform by a watchdog.
Binance Turkey said that it “openly” communicates and cooperates with regulatory and supervisory authorities, and it strives to “create a sustainable, healthy and safe ecosystem.”
The Central Bank’s ban on using cryptocurrencies for making payments, which was introduced in response to claims that such transactions are too risky, took effect on April 30.
On May 4, MASAK released a guide for crypto asset service providers. Under the guidelines, crypto exchange platforms are entitled to verify the identities of subscribers, to report suspicious transactions and high-volume trading. In the failure of fulfilling those obligations, crypto exchange companies could be fined by MASAK and in case of recurrence, their owners could face prosecution.
Daily trading volume on Binance, the largest crypto platform in Turkey, is around $320 million, according to CoinGecko. More than 30 cryptocurrency platforms are based in Turkey.