When will Bitcoin go back up? How low will it go? Will it be back up in 2022?
Has Bitcoin recovery begun?
The Bitcoin recovery has not yet begun. Two reasons
- There is no evidence US inflation rates have fallen. Why is this important? Bitcoin reached its All-Time High on November 10th, 2021, and began to fall from that day onwards. On November 10th, 2021, the US reported its latest consumer inflation numbers which showed that US consumer inflation had breached 6%. US Inflation numbers continue to remain high.
- On Thursday, Brent Crude Oil prices closed at $119.8 after falling close to $116 on the back of Fed-induced rate hikes, it then Crashed to $113 on Friday. It remains to be seen if this sustains going forward. How is this related to Bitcoin? Crude prices began to rise on December 20th, 2021. Between December 20th, 2021, and today, Brent crude rose 61%, and BTC has fallen 58%. In many ways, Bitcoin and Crude Prices mirror each other and move in opposite directions
Unless inflation begins to fall and Crude prices ease, it is unlikely Bitcoin prices will stop falling and begin to recover. Inflation is likely to fall earlier than Crude prices as the Fed rate hikes go through the financial system.
How low will Bitcoin go?
There are no consensus forecasts and Technical forecasts are dependent on whether Bitcoin falls below a certain level. But looking at the correlation with Inflation, our forecast is that Bitcoin could fall as low as $15k. This assumes consumer inflation will rise to 9% next month.
Other publicly available forecasts are also ranging in the $13k to $15k range. Technical forecasters are predicting a range between $17k and $20k.
Will Bitcoin go back up in 2022?
- On Wednesday, the Fed increased interest rates by 0.75% with a promise of more to come. It is expected that inflation will begin to fall over the next 2-to 3 months in response to the Fed’s repeated rate hikes (more ahead).
- Bitcoin with its limited supply, wide acceptance, and recognition has a very good use case to sustain value. It has some properties of Gold with limited supply and mining difficulty while it also has some properties of currency in the form of payment acceptance. So owning and purchasing the coin wouldn’t be a bad investment in the long run
- With a market cap of less than a Trillion, Bitcoin makes up for almost nothing in the Global Investment portfolio. So the opportunity is immense.
When will Bitcoin go back up?
As outlined earlier, Bitcoin is likely to start rising on a more consistent basis once inflation is tamed. However given that the Fed is cutting off the liquidity pipe, do not expect a recovery of the sort seen from March 2020 onwards. This could be slower. The question is when is US inflation expected to fall?
- The OECD projects inflation (17 affluent countries) to peak during the summer of 2022 and then fall lower.
- Kiplinger too claims inflation will peak in the summer and then taper down
We know Crude prices are also expected to fall in the 3rd or 4th quarter this year.
So one can say from the information we have that, Bitcoin prices are likely to rise again from September-October this year.
Under what conditions could these forecasts be wrong? Unpredictable turn related to the Russian Invasion of Ukraine, New Geopolitical Crisis not seen at the moment, new food-related supply chain issues, unpredictable weather conditions impacting food supply, Political gridlock or showmanship in the US owing to the November elections.
To know more about Bitcoin as a class of Investment, read our article on Bitcoin Price Prediction and Forecast
Note: Crowdwisdom360 collates Predictions and data from all over the net and has no in-house view on the likely trends in the Stocks or Crypto Coins. Please consult a registered investment advisor to guide you on your financial decisions.
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