Boom or bust? Is there a way for Bitcoin price to hit $100K in 2022?


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The web is crammed with Bitcoin (BTC) worth forecasts. For instance, some analysts imagine that the flagship crypto will hit $1 million per coin within the subsequent 10 years, whereas others assume BTC worth will ultimately drop to zero.

With out dwelling on predictions which are 5 or extra years forward of us, allow us to deal with what Bitcoin may do, say, within the subsequent six months?

Once more, the forecasts fluctuate drastically. As an illustration, Antoni Trenchev, the founding father of Nexo Finance, sees Bitcoin price hitting $100,000 by mid-2022.

On the opposite finish of the spectrum is Sussex College professor Carol Alexander, who thinks Bitcoin worth may drop to as little as $10,000, thereby wiping out all the gains it had made in 2021.

Bitcoin has been trending virtually in the course of these two extraordinarily far predictions and at press time the associated fee to buy one BTC is near $36,500 at Coinbase.

BTC/USD weekly worth chart. Supply: TradingView

Bitcoin’s circulation will enhance on a mean of 6.25 BTC per 10 minutes till the subsequent halving in early 2024. This implies miners will produce about 900 BTC on daily basis. Because of this, by the top of June 2022, there will probably be a complete of 162,900 BTC created into the 12 months.

This is able to push the entire Bitcoin provide in circulation to about 19.078 million BTC. If BTC worth is $100,000 by then, its complete market capitalization could be practically $2 trillion, up 128.50% from the 12 months’s opening valuation close to $875 billion.

Conversely, a drop to $10,000 would push the Bitcoin market capitalization of the entire circulated tokens right down to over $190 billion, down $685 billion, or about 78%, from this 12 months’s open.

So the largest query that involves thoughts after taking a look at these mind-boggling predictions is whether or not it’s even doable for Bitcoin to maneuver violently in the direction of both of the targets talked about above. For my part, the reply is a BIG YES, primarily as a result of BTC price has been notoriously volatile up to now.

Bitcoin quarterly returns. Supply: Coinglass

One query to contemplate is whether or not or not traders are able to inject virtually a trillion {dollars} into the Bitcoin market throughout the subsequent six months? Trenchev believes they could due to the “low-cost cash” issue.

Sovereign foreign money devaluation stays a catalyst

Buyers can have observed that the U.S. greenback’s valuation has been recovering currently.

A well-liked financial indicator, dubbed because the “U.S. dollar index,” measures the dollar’s power in opposition to a weighted basket of six foreign currency echange — the Euro (EUR), Japanese Yen (JPY), Pound Sterling (GBP), Canadian Greenback (CAD), Swedish Krona (SEK), and Swiss Franc (CHF) — surged over 7% to 96.22 final 12 months.

U.S. greenback index weekly worth chart. Supply: TradingView

It is also value noticing that the greenback’s valuation has surged solely in opposition to fiat currencies, however in opposition to commodities, the dollar has been losing battle after battle.

As an illustration, a latest U.S. Bureau of Labor Statistics report signifies that consumers paid 7% higher for everyday items in December 2021 than they did 12 months in the past. In different phrases, the inflation on the earth’s largest financial system has risen to the degrees by no means seen earlier than 1982.

This reveals the greenback is nothing however the perfect weak boxer in a hoop competing with the six weakest boxers. Certain, the dollar has been profitable rounds in opposition to all of them, however it has additionally been working away from the actual competitors.

Talking of competitors, let’s examine its worth in opposition to a scarcer asset, gold.

Fiat currencies versus Gold since 1900. Supply: VOIMA

The picture above additionally reveals that the majority the fiat currencies have misplaced their sheen in opposition to gold. The massive elephant within the room is inflation, which benefiting traders which were hoarding the valuable steel — or any arduous cash equal — in opposition to the present bearish development in currencies just like the greenback.

Presently, there’s about $40 trillion circulating across markets, which incorporates all of the bodily cash and the cash deposited in financial savings and checking accounts. In the meantime, investments, derivatives and cryptocurrencies are above $1.3 quadrillion.

So sure, there are sufficient dollars obtainable out there to pump the Bitcoin market by one other trillion {dollars}, such that its price per unit rises to $100,000 within the subsequent six months.

Why hasn’t BTC hit $100,000 already?

Earlier than even entertaining that argument, it’s wiser to have a look at Bitcoin’s market cap efficiency over time.

BTC/USD six-month market cap chart that includes $100B+ in rallies. Supply: TradingView

Within the six-month timeframe chart above, one can see that there has not been a single occasion whereby the Bitcoin market capitalization had risen by over $1 trillion. Equally, there additionally has not been a single case the place Bitcoin’s market valuation dropped by greater than $190 billion in six months, as required within the occasion of a BTC worth drop to $10,000.

Regardless of not rising or falling drastically, the Bitcoin market — as per historic knowledge — attracts extra capital in that it spits out, indicating why its worth per unit has rallied by greater than 14,250% thus far since January 2014.

Now, returning to the “why-it-has-not-happened” argument, there appears to be just one reply: uncertainty. And uncertainty has many branches, starting from regulatory troubles to fears that the Bitcoin market might have a correction after rallying for nearly two years in a row.

The Fed’s “taper tantrum” is impacting investor confidence

Essentially the most generally mentioned purpose for Bitcoin’s latest drop from $69,000 to $34,000 is the U.S. Federal Reserve’s decision to end its $120 billion a month asset purchasing program earlier than anticipated. That is anticipated to be adopted by a minimum of three rates of interest hikes from their present near-zero ranges.

These unfastened financial insurance policies ended up injecting about $6.5 trillion because the coronavirus-induced world market crash in March 2020. On account of the surplus liquidity, the greenback’s worth dropped whereas riskier belongings, together with Bitcoin, turned ballistically bullish.

In accordance with Crossborder Captial founder Micheal Howell, the surplus funds out there ‘needed to go someplace.’

M2 cash provide weekly chart. Supply: TradingView

Because the Fed unwinds its quantitative easing coverage to tame inflation, it successfully removes the surplus {dollars} from the market. And because the markets — hypothetically — run out of money, they increase it by promoting their most worthwhile investments, be it inventory, actual property, Rolex watches or crypto.

Subsequently, the subsequent six months may become a seesaw between those that want money and people who do not. Inflation led by the greenback devaluation may maintain many traders from promoting their belongings, together with Bitcoin. However with the Fed switching off its liquidity plug, crypto markets may face difficulties in attracting new cash.

This leaves Bitcoin with traders and corporations which have extra money of their treasuries and have been seeking to deploy them into simply liquefiable belongings.

To date, Bitcoin has attracted large names like Tesla, Sq., MicroStrategy, and others. So naturally, it could take a minimum of a preferred Wall Road agency’s willingness so as to add Bitcoin to its treasury to allow BTC’s push towards $100,000.

Ready on the retail growth

In the meantime, as inflation creeps into folks’s on a regular basis lives, their probability of adopting arduous belongings to guard their financial savings may additionally imply a boon for the Bitcoin market. As an illustration, BTC’s climb to $69,000 final 12 months coincided with an unprecedented spike in retail curiosity, per a Grayscale Funding report.

Associated: Retail is pushing the Bitcoin price up, says Ledger CEO

The U.S. agency surveyed 1,000 traders and located that 59% have been eager about investing in Bitcoin. In the meantime, 55% stated that they had bought the belongings between December 2020 and December 2021.

Bitcoin addresses with a non-zero BTC stability. Supply: Glassnode

Whether or not growth or bust, this is what must occur

If, Bitcoin have been to succeed in $100,000 by the top of June 2022, this is what would want to occur. 

  • The M2 cash provide stays at an all-time excessive.
  • The deliberate rate of interest hikes fail to maintain inflation beneath the Fed’s 2% goal.
  • The variety of non-zero Bitcoin wallets continues to rise to new file highs.
  • Extra firms add BTC to their treasuries.

In the meantime, Bitcoin may crash to $10,000 if:

  • Lengthy-term traders resolve to dump Bitcoin to boost money.
  • Regulatory points and a pointy correction in equities costs weighs on crypto pricing.
  • Some unexpected market manipulation or black swan occasion tanks BTC worth just like the March 2020 flash crash.

The views and opinions expressed listed here are solely these of the writer and don’t essentially mirror the views of Each funding and buying and selling transfer entails threat, you need to conduct your personal analysis when making a call.