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Bitcoin (BTC) has not had the best January performance in four years
Data from Coindesk shows January 2022 to be the worst-performing start for Bitcoin of any year since 2018; however, investors believe that this price drop will be temporary, as volatility is quite common in the world of cryptocurrencies.
With current spot prices of $36,800 (BTC/USD) showing a decline of 20.1% compared to the start of the year, it seems that the downward trend started in November last year, according to Cointelegraph. In comparison, 2021 started off with gains of over 21%, making the month of January historically a โgreenโ month for Bitcoin.
As the largest cryptocurrency in terms of market value, Bitcoin spent 65% of January in a downward trend. Other coins also followed suit, with Ether down 30% from December.
Due to the nature of the cryptocurrency market, itโs unclear why Bitcoinโs price initially fell, but the BTC price continued to underperform in January. According to data from Financer.com, the drop in Bitcoin price doesnโt seem to have a huge impact on the daily trading volume of major cryptocurrency exchanges, with top exchanges like Binance, Coinbase, and Crypto.com still showing USD volumes in the multi-billions.
What will the next few weeks and months hold for Bitcoin prices? Although investors are pondering a continued downward trend, history shows that February 2022 could show an unexpected increase. In 2021, BTC/USD gained almost 37% in one month and the last serious decline in February happened back in 2014.
Bitcoin โ A bull Or bear market?
Panic selling added to the mounting BTC price loss in January with some investors selling coins for less than they paid them for. Although no investor wants to lose money, they sell anyway โ fearing taking even greater losses if they donโt.
Long-term investors, though, argue that stronger players will buy up the supply and profit in the end, to the detriment of those who decided to sell.
The recent price turbulence is not as concerning to crypto veterans who are used to volatility, but many investors only got in recently and this decline is especially painful for them.
All things considered, the last year resembles a consolidation era after rapid gains just more than a year ago. Whether or not the decline continues remains to be seen, but the outlook for the cryptocurrency market doesnโt seem to be all negative.
Data from analytics firm Glassdoor last week shows more than 65% of Bitcoin transactions now include large sums in excess of $1 million. This upward trend in institutional dominance started in October 2020 and has been growing ever since.
This refers to institutions, not retail, as the driving force, making 2022 seemingly the year that institutions will return to the Bitcoin market.
REUTERS
