The price of bitcoin has fallen from around $51,000 to just over $47,000 at the time of writing, and several other forms of crypto are also feeling the heat. Ethereum, for example, has risen about 400 percent since the beginning of the year, though it is set to experience its worst month since March of 2021.
Bitcoin Has Taken a Dip
According to many analysts, the problems stem from growing Omicron cases – the new coronavirus variant – and from climate change. While many coins such as bitcoin and Ripple’s XRP are up since early 2021, they are experiencing some of the worst dips of the last 12 months.
Brian Kelly – the CEO and founder of digital currency investment firm BKCM – explained in an interview:
With Omicron coming along and the U.S. economy stalling a bit, a lot of macro funds that use bitcoin as this pro-cyclical inflation hedge have decided to take profits throughout December.
Lou Kerner – a partner at Blockchain Coinvestors – explained that many environmental concerns have also contributed to the falling prices of bitcoin and its many digital counterparts. He says:
Today ‘proof of work’ from the [cryptocurrency] mining machines is looked upon negatively by a lot of the investment community because of the energy it consumes, but if you dig deep, much of the energy is energy that couldn’t be used for anything else. Relative to the massive value we are getting from it, the energy I think will become much less of a concern next year.
We’ve seen these environmental concerns making themselves noticed all year. Many are worried about the prospects of crypto mining and believe it is wreaking havoc on the planet.
In addition, many publicly-traded crypto companies – such as MicroStrategy and Riot Blockchain – saw their stocks take negative turns beginning late December. MicroStrategy is down roughly 21 percent, while Riot Blockchain has fallen by close to 40 percent. Marathon Digital is also down by more than 30 percent. Kerner says:
We are on the cusp of a deep understanding by institutional investors of the different companies and what they actually do and the economics of the businesses. It’s still hard for most investors to wrap their head around mining. It’s a small part of the market, so you don’t have a lot of institutional investors devoting massive amounts of time to it. It’s easier for them to just look at it like a basket.
Is $100,000 Still Possible?
Despite all the bad press, Kerner is still very confident in bitcoin and believes the currency could hit the six-figure range by the end of this year. He comments:
You’ll see a lot of other coins, whether they be in the metaverse, gaming or decentralized finance do really well. The venture capitalists, new money and funds like mine are focused on those early growth opportunities.