Fidelity: Influx of Large Assets + Long-Term Hold by Bitcoin Miners, $40,000 Key Support for Bitcoin in 2022

According to Fidelity Digital Assets, the Bitcoin miners in 2021 were not affected by the China crackdown and instead increased their efforts, resulting in a rise in overall network hash rate which has expanded globally. As a result, they are optimistic that $40,000 will be a "key support level" in 2022.

Price Volatility in 2021

Fidelity Digital Assets has released a recent report pointing out that 2021 has been a year of price volatility for Bitcoin. The price of Bitcoin rose by 64% in 2021, starting at around $29,000 at the beginning of the year and ending at around $47,000 by the end of the year. The chart shows the overall horizontal trend of 2021, which was full of fluctuations.

In April, Bitcoin quickly surged to a historic high of over $63,000, with a gain of over 100% in just a few months, followed by a drop of over 50%. In late July, Bitcoin was pushed back to its year-start price, falling below $30,000. Subsequently, due to significant inflation, a new historic high of over $67,000 was reached in early November.

The report indicates that in 2021, more institutional investors have increased their allocation to Bitcoin investments through private placements and futures ETFs, with these institutions indicating plans to further increase their cryptocurrency investment allocation in the future. Among the surveyed U.S. and European institutional investors, 71% intend to allocate to digital assets in the future, and the allocation for digital assets in 2022 is expected to be higher.

Hashrate Not Decreasing Despite China's Exodus

Additionally, miners' contributions are crucial support for the price of Bitcoin. In 2021, China's complete exit policy resulted in a more than 40% drop in hashrate from May to July. Analysts originally expected it would take at least a year for the hashrate to recover to its previous high due to the need to repack and transfer mining equipment to other operators. However, the results were completely the opposite, with the hashrate rebounding much faster than expected, now about 5% higher than the previous peak in the past month.

The United States has become the biggest winner of the mining machine migration, currently holding about 35% of the global Bitcoin hashrate, making it the world's top position, compared to just 4% two years ago. While China previously held 75% of global hashrate, the increased risk of national control prompted a more widespread distribution of hashrate globally, making it more secure and stable, avoiding influence from a single country.

A recent example of this is the quick recovery of hashrate following the power outage caused by unrest in Kazakhstan.

Miners Continue Long-Term Investment, Not Quick Profits

The report from Fidelity indicates that the speed of Bitcoin hashrate rebound shows that "miners are focused on long-term profits."

The value of Bitcoin can be seen through the actions of miners, who have the greatest economic incentive to demonstrate the adoption and value of Bitcoin. Recent behavior of miners indicates that the Bitcoin cycle is not yet over, as these miners are investing in Bitcoin for the long term, rather than quick profits, enhancing the resilience and reliability of the Bitcoin network.

Overall, Jurrien Timmer, Director of Global Macro at Fidelity Investments, believes that the key support for Bitcoin in 2022 will be around $40,000, noting that Bitcoin is already "technically oversold" at that level, which could mean a short-term rebound.

Fidelity also predicts future countries adopting Bitcoin. The report suggests that as more countries adopt Bitcoin, it will increase competitiveness among them. The Pacific island nation of Tonga also plans to follow El Salvador's lead in adopting Bitcoin nationwide by the end of 2022. Therefore, "if we see other countries buying Bitcoin in 2022, or even central banks joining, we will not be surprised."

Bitcoin Price to Reach New Highs

The report concludes that with more regulations and better products, traditional assets worth hundreds of trillions will enter the digital asset ecosystem. Combined with miners hoarding, this will not only extend the Bitcoin cycle but also propel Bitcoin to new highs.

"Digital assets are spreading into areas such as art, culture, music, and gaming. We can't help but ask, what more do skeptics need to see to believe that digital assets will not disappear?"

This article is authorized and adapted from Horizon News Network