Top Three Biggest Challenges for Bitcoin in the Second Half of 2021
- After a turbulent first half, Bitcoin has to deal with looming challenges ahead
- A solid support system is committed to finding ways to overcome impending risks
Bitcoin had a wild and turbulent first half of 2021. It started solidly, reaching an all-time high of nearly $65,000 in April. However now, Bitcoin has dropped over 50% to a low of $28,800. At the start of the second half of the year, the largest digital currency is trading near the $34,000 mark.
After a volatile six-month period, Bitcoin garnered solid support from large mainstream institutions, financial and banking firms, and even governments. The heightened demand brings a number of looming risks that could define the next six months for the cryptocurrency.
Looking ahead, there are certain risks that the crypto community would need to deal with so the path could be cleared for further adoption. The same risks put a dent in bitcoin’s rally in the first half.
Regulation is currently one of the biggest risks for Bitcoin. In the last few weeks, China has renewed its crackdown efforts on its cryptocurrency industry. In May and June, Chinese authorities have ordered the shutdown of crypto mining operations. Also, they prohibited banks and payment companies from doing business with crypto companies.
In the US, the Securities and Exchange Commission (SEC), the Treasury Department and the Commodity Futures Trading Commission (CFTC) are working to offer a regulatory framework that would provide protection and introduce rules in the volatile crypto space.
Volatility comes as another risk facing the growth of the crypto market. The extreme price swings are a turn-off for many traditional investment firms. Wild price fluctuations day in and day out have been an ordinary feature for the crypto market, in the past, even this year.
Environmental concerns is the third significant factor affecting bitcoin’s price appreciation. The high levels of energy consumption used for Bitcoin mining, have raised questions over the future of the digital currency. In fact, the alarming carbon footprint of Bitcoin was the reason that Elon Musk cited this year. This happened when he stunned the crypto community as he announced Tesla will no longer accept Bitcoin as means of payment.
Large-scale investment firms such as Andreessen Horowitz, big tech companies like MicroStrategy, and professional investors like Stanley Druckenmiller and Ray Dalio, are all committed to deal with the challenges for Bitcoin. So they are all united to help the crypto movement take its next step.