In the last 52 weeks, Bitcoin’s price has risen by 72%. Bitcoin began in 2021, trading around $32k per coin after it surpassed its 2017 all-time high of $20,000 towards the end of 2020. The leading cryptocurrency continued its 2020 rally in 2021 and quickly reached a new all-time high above $64k by April.
The rally came as the adoption of cryptocurrencies continued. The entry of more corporate entities into the crypto space helped push the price further. Tesla began accepting Bitcoin as a means of payment for its electric vehicles; MicroStrategy continued to accumulate more bitcoins, and El Salvador was preparing a bill to make Bitcoin a legal tender.
The increase in adoption from institutional and retail investors pushed Bitcoin to a new all-time high of $64k. However, from May, Bitcoin went on to underperform till September. The poor performance was mostly caused by China’s ban on cryptocurrency-related activities.
It began with the various provinces in China banning cryptocurrency mining activities. China accounted for most of Bitcoin’s mining hash rate. Hence, the crypto mining ban resulted in Bitcoin mining’s hash rate declining massively. Thus, resulting in Bitcoin’s price losing more than 50% of its value and dropping below the $30k level in July.
The Chinese government didn’t stop there. The People’s Bank of China (PBoC) banned financial institutions and corporate entities from engaging in crypto-related transactions. Companies caught processing crypto-related transactions are sanctioned. This move effectively ended crypto trading activities in the Asian country. Thus, resulting in numerous cryptocurrency exchanges ending their services in China. Furthermore, companies such as Alibaba and Bitmain stopped selling crypto mining hardware to Chinese residents.
The attack by Elon Musk on Bitcoin and its massive energy usage also contributed to the bearish performance. Tesla discontinued its Bitcoin payment method due to environmental concerns about its energy usage for mining purposes.
Bitcoin’s price would bounce back in September as miners moved to Europe and North America. The mining hash rate started to recover as the mining farms, and other individual miners found new homes in countries such as The United States, Kazakhstan, Iran, Canada, and several others.
El Salvador became the first country in the world to officially make Bitcoin a legal tender in September. Despite the warnings from global financial institutions like the IMF, El Salvador’s Bitcoin adoption is already yielding fruit.
Bitcoin slowly rose to reach a new all-time high at $69,044 in November, with the total cryptocurrency market cap reaching a new all-time high of $3 trillion. The increase in demand for Bitcoin by institutional investors and the entry of more corporate entities helped push the market higher.
However, Bitcoin is currently down by nearly 30% from its all-time high and is trading around $50k per coin at the moment. The recent poor performance has been attributed to selling pressure in China as exchanges close their operations in the country, and Chinese traders are selling their bitcoins before they lose their money.
