Following Bitcoin becoming a form of legal tender in El Salvador, interest in this form of paytech has boomed, with industry leaders speculating as to who could be next to board the crypto train.
Here, Marcus Sotiriou, Analyst at the UK based digital asset broker GlobalBlock discusses the use of Bitcoin, its current trends, and who the next state to adopt the cryptocurrency in 2022 might be.
Bitcoin is currently hovering around $42,800, with some telling signs that this price region could be a good buying opportunity. Data from Glassnode shows that short term holders (investors who bought Bitcoin within the past three months) is at a historically low level of three million (shown by the chart below).
This figure is the lowest since August 2020, which preceded a 500 per cent rally in price. A low level of short term holders could precede a rally for Bitcoin because this type of investor tends to sell for quick profits, as opposed to institutions that typically hold for at least six months.
Will more sovereign states adopt Bitcoin in 2022?
In a report by Fidelity on crypto trends and their potential future impact, they discussed the adoption of cryptocurrency by sovereign nations. They said they wouldn’t be surprised to see two more nation states acquire Bitcoin this year, after El Salvador decided to make Bitcoin legal tender last Summer and buy Bitcoin frequently since.
As per its report, Fiedlity explains: “We also think there is very high stakes game theory at play here, whereby if bitcoin adoption increases, the countries that secure some bitcoin today will be better off competitively than their peers. Therefore, even if other countries do not believe in the investment thesis or adoption of bitcoin, they will be forced to acquire some as a form of insurance.”
The CEO of deVere is more optimistic and thinks there will be three more countries to adopt Bitcoin as legal tender this year: “I agree with the notion that more countries will follow El Salvador in 2022, particularly South American countries that are severely impacted by inflation.
“Paraguay and Brazil are reported to be looking to adopt Bitcoin on a national level, and this adoption would dramatically decrease the volatility of Bitcoin over time.”