Following Wednesday’s downturn in Bitcoin, a continuation of selling dipped the price as low as $41,000 today. Marking a 14-week low for the leading cryptocurrency.
But as far as drawdowns go, this dip isn’t as severe as past ones, most notably in recent memory, the crash of May 2021, which saw a 45% drop in price over seven days.
There’s every possibility the current decline may worsen. But as things stand, the macro bull structure remains intact, leading to some analysts holding their calls for a $100,000 Bitcoin in 2022.
Then again, there’s a debate to be had on the efficacy of technical analysis. Those with a good memory will recall that $100,000 calls were being made for the end of 2021. Yet Bitcoin still closed the year falling way short of that, at $47,700.
Add to that a backdrop of weakening appetite for risk-on assets, and some would say a $100,000 price target is outright hopium.
Speculative Bitcoin has it all to do
Bitcoin’s stuttering start to the new year was blamed on the discovery of a new variant and civil unrest in Kazakhstan, which serves as a major mining hub. But perhaps most consequential of all was the Fed’s new hawkish narrative.
Wednesday saw the release of minutes to a mid-December meeting of Fed officials. The notes outlined concerns over elevated inflationary pressures, fueling the likelihood of a rate rise and moves to reduce the balance sheet.
Markets duly responded, triggering a 10% drop in Bitcoin on the day. And, with the Nasdaq suffering the worst decline of the major indices, analysts concluded that investors have turned cold on risky speculative assets.
Although investors were well aware of inflationary concerns before December, the Capital Markets Editor at the FT, Katie Martin, said the Fed’s revised stance made the situation all the more concrete.
“Sure. But higher interest rates are, all things being equal, not great for highly speculative assets. It’s not great for, rate rises are not great for crypto, for what it’s worth.”
What’s the argument for a $100,000 price?
While a possible, sooner than expected, increase in the cost of borrowing may turn investors off speculative assets, Bloomberg’s Senior Commodities Strategist Mike McGlone disagrees.
Instead of dulling demand, McGlone states Bitcoin’s unfolding status as a “digital reserve asset” will likely bring about the opposite scenario.
“Bitcoin is a risk asset that’s evolving into a digital-reserve asset in a world going that way—and that has positive implications for its price.”
With that, McGlone is sticking with a $100,000 price prediction in 2022.
The post Bitcoin sinks to 14 week low, but some analysts say $100,000 in 2022 is still on appeared first on CryptoSlate.
