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Bitcoin is most profitable financial instrument of 2021: where will the cryptocurrency end this year?


Relevance up to 12:00 2021-12-29 UTC+00

Bitcoin continued to develop as a class asset in 2021, simultaneously performing its usual functions of protecting against inflation. Most of the bullish rally of cryptocurrencies throughout the year was associated with risk hedging. But in the final quarter of 2021, this trend began to fade due to the curtailment of the incentive program and a prolonged correction of the asset.

Despite this, Bitcoin remains in demand, and the growth of correlation with the S&P 500 index indirectly indicates the role of the cryptocurrency in the future. In 2021, the digital asset played the role of a financial instrument that brings a solid profit. This opinion was expressed by experts of the audit and consulting company FinExpertiza. According to the research work, Bitcoin showed the highest profitability for the year even after paying all taxes. The real estate market came in second place, and American and Russian securities came in third and fourth.

These are far from all the records that Bitcoin has updated in the course of 2021. According to analytics company Visibrain, users posted a record of 100 million tweets mentioning the first cryptocurrency. For comparison, this is 350% more than in 2020, which speaks of the growing popularity of Bitcoin and the entire cryptocurrency industry among ordinary people. The launch of the BTC ETF set a new record for Bitcoin futures trading volumes, which increased by 338%. There is also an increase in the options market, where the growth was 443%.

All these factors indicate that the number of references to the “death of Bitcoin” will fall, and the distribution and use of the coin will only grow. But it’s not worth waiting for a full-fledged bull rally in 2021. The cryptocurrency is within the narrow range of $49.6k-$52k and is unlikely to be able to go beyond it upwards.

Apparently, the recent surge in activity has not turned into a full-fledged upward movement. This was predictable since the market is busy with acquisitions, and before the active phase on the eve of the new year, and the largest expiration in the history of more than $5 billion. Therefore, an upward movement in 2021 is excluded due to the passivity of the market, profit-taking, and the fulfillment of term obligations on options on December 31.

At the same time, there is still a chance to plunge headlong into the $42k-$45k area again. Bitcoin has made a false upward spurt and is gradually rolling back into the usual oscillation zone. In the near future, I expect the price to decline below $49.6k, where an important support zone passes. The asset has already touched the $48.7k mark, but buyers held their positions and pushed the price. Despite this, low trading volumes and an unbreakable resistance zone near $52k bury the remaining hopes of the market to reach at least $60k by the end of 2021.

*The market analysis posted here is meant to increase your awareness, but not to give instructions to make a trade.

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