Forex Analysis & Reviews: 02.02.2022 - Bitcoin ranks among top 3...

02.02.2022 05:52 PM

Bitcoin ranks among top 3 means of payment in terms of transaction volumes

Bitcoin began 2022 with a massive drop and the formation of a local bottom near the $31k mark. However, this has not prevented the cryptocurrency from remaining one of the most sought-after and promising. Cryptoanalyst Willie Wu believes that today, bitcoin is on the same level as the Internet in 1997 in terms of adoption. This confirms the fact that the major crypto will continue to evolve and become the center of the new WEB 3.0 economy.

The government of El Salvador and President Nayib Bukele gained the upper hand in belief in Bitcoin from Michael Saylor and MicroStrategy in early 2022. While the fintech company is a major Bitcoin holder, El Salvador is doing its part to fully embrace it and is relaunching the Chivo wallet. In December 2021, the country's government signed a contract with AlphaPoint, a US company specializing in software development. The specialists have improved and simplified the user interface, fixed numerous bugs and errors, and integrated the Lighting Network payment system.

The innovation enables wallet users to make instant transactions using the Lighting network. According to the latest figures, around 75% of El Salvador's population has already downloaded the Chivo wallet. The Lighting payment protocol has made bitcoin a full-fledged means of payment that surpasses the leading payment systems. It is likely that in the near future, giants such as Visa and Mastercard will give the pas to cryptocurrency.

In 2021, Bitcoin was one of the top 3 payment vehicles in terms of volume of transactions conducted. According to a NYDIG study, the first cryptocurrency network processed more than $3 trillion in financial transactions in 2021. The digital asset has surpassed American Express, the leading US protocol, which made $1.28 trillion in transfers during the same period.

Record transaction volumes and the support of major investors and entire nations have allowed Bitcoin's functionality to expand significantly. Cryptocurrency is used as a hedge against inflation by institutional investors, and much of the record transaction volumes are to their credit. However, the introduction of Lighting Network protocols allows the digital asset to remain in demand among retail audiences as well. All these facts suggest that despite high levels of volatility and a fair price for the asset of around $38k from JPMorgan, bitcoin continues to evolve as a versatile instrument.

As for the current situation around the coin, I believe that the market will soon leave the zone of extreme fear. This will largely depend on a strong move in the $38k-$40k zone. So far, this zone is weak, but we cannot say that bulls have lost momentum and are ready to give the market to bears. There is still a chance of the cryptocurrency falling towards $30k, as well as of a possible $28k spike. Technical indicators have started to fall after a failed $39k assault. Stochastic has made a wide bullish crossover and RSI has acquired a downward trajectory. All this suggests local bearish dominance and a gradual decline in the price, which is supported by the confidence of the stock indices. However, in the current market situation, the downward movement of BTC should be seen as a signal to open long positions rather than panic.