Bitcoin has dropped to a frightening level below $42,000 these days. Should we be worried about it’s fate?

You might have thought that the introduction of the digital yuan would start a big showdown between bitcoin and the Central Bank Digital Currencies (CBDC). However, this showdown is already going on for a long time. And every battle so far, bitcoin won. Central banks cannot oppose bitcoin on a technological level, and this has already become clear from the failed attempts made by the states of the Bahamas, Nigeria and Venezuela. Is this decline then the result of an institutional attack? Not yet.

In order for an institutional attack to occur, the attacking State or, better said, the attacking Central Bank needs to provide an ‘alternative’ – its own centralized digital currency (CBDC). And that, as previous unsuccessful examples show, has not yet succeeded in any central bank or the International Monetary Fund. We shall see what the Chinese attempt will be like. Aside of China, four other countries are announcing the development of their own centralized digital currencies. Those are:

1. Jamaica
The country is set to roll out its CBDC in the first quarter of 2022

2. Kazakhstan
Rumor says by the end of this year

3. Russia
Pilot testing of the digital ruble starts in early 2022

4. Brazil
Testing this year. No sooner than in 2024 for public use.

Why?

If, therefore, it is not an institutional attack, then what is the cause of this decline in the dollar value of bitcoin? There are two main causes.

The first is a hint from the US Federal Reserve that they could raise the interest rate on dollar loans by up to 1% by the end of the year. If the dollar rate rises, the demand will skyrocket for debt repayment, which means that many who took the dollar at a zero interest rate to buy bitcoin have now begun preparations for a possible debt repayment.

Another group that should not be ignored that sells bitcoin is the so-called ‘stupid money’ in general – as opposed to ‘smart money’. These are the ones who sell bitcoin and buy bonds expecting higher yield. This group is called ‘stupid money’ because it believes in the promise of the FED, which does not have to be fulfilled at all. And even if it is fulfilled, what kind of profit do those who receive 1% of yield expect in the conditions of inflation that exceeded 8%?

An excellent additional consideration of this cause in the text entitled ‘On the Brink’ written by ours @zyx066.

The other cause is the crisis in Kazakhstan.

Kazakhstan is a huge country, the ninth in the world in terms of territory, which has a border with China 800 kilometers long. After the last unsuccessful attempt to ban bitcoin in China, Kazakhstan broke into second place in the hash rate of bitcoin mining. About a week ago, on the basis of dissatisfaction with the increase in fuel prices, another ‘colored revolution’ was raised in Kazakhstan, with a fairly clear signature of the author. In response, the authorities there turned off the Internet and in some places the electricity supply in the affected regions. The result? The hash rate of the bitcoin network lost 13.4% of its strength, and the value of bitcoin expressed in dollars fell by seven percent.

What will happen?

Before you become part of the ‘fearful money’ group, I will point out to you the recurring inevitability: Whenever the value of bitcoin expressed in dollars falls, the so-called "Smart money", ie. a group of speculators who know how to use the opportunity and buy at the lowest price. ‘Buy the dip’ is their golden rule. The relentless printing of new quantities of dollars provides the largest speculators with funds for mass purchase, which will inevitably raise the price in dollars many times over the previous historical maximum. Just remember how after the declaration of the ‘pandemic’ on March 12, 2020, bitcoin dropped to only $4,900…

…to record a new historic high of almost $68,000 just 20 months later!

So you will not need panic but patience. Soon, all the ‘big players’ will start buying again, as the Binance exchange office has already started. And in the following text, you will have my estimate of the growth of the price of bitcoin in 2022. Until then, don't forget to follow the only true value relationship:

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