After Wednesday’s crash in Bitcoin, continued selling pushed the price down to $ 41,000 today. Marking a 14 week low for the leading cryptocurrency.
But when it comes to reductions, this drop is not as serious as in the past, especially in recent memory, the drop in May 2021, which experienced a 45% drop in price over seven days.
There is a good chance that the current decline will get worse. But as it stands, the macro bullish structure remains intact, leading some analysts to stick with their calls for a $ 100,000 Bitcoin in 2022.
On the other hand, there is a debate about the effectiveness of technical analysis. Those with good memories will remember that $ 100,000 calls they were being made by the end of 2021. However, Bitcoin ended the year well below that, at $ 47,700.
Add to that a backdrop of weakening appetite for risk assets, and some would argue that a $ 100,000 price target is simply hops.
Speculative Bitcoin has it all to do
Bitcoin’s faltering start to the new year was attributed to the discovery of a new variant and civil unrest in Kazakhstan, which serves as a major mining hub. But perhaps most important of all was the Fed’s aggressive new narrative.
Minutes from a meeting of Fed officials in mid-December were released on Wednesday. The notes outlined concerns about elevated inflation pressures, fueling the likelihood of a rate hike and moves to lower the balance sheet.
The markets responded appropriately, causing a 10% drop in Bitcoin on the day. And, with the Nasdaq suffering the worst slide of the major indices, analysts concluded that investors have turned cold on speculative risk assets.
Although investors were well aware of inflationary concerns prior to December, the FT Capital Markets Editor, katie martin, said the Fed’s revised stance made the situation even more concrete.
“Sure. But higher interest rates, all things being equal, are not good for highly speculative assets. Not good for, rate hikes are not good for cryptocurrencies, for what it’s worth.”
What is the argument for a price of $ 100,000?
While an earlier-than-expected rise in the cost of borrowing may drive investors away from speculative assets, Bloomberg’s senior commodities strategist Mike mcglone would not you agree
Rather than reducing demand, McGlone claims that Bitcoin’s development status as a “digital reserve asset” will likely provoke the opposite scenario.
“Bitcoin is a risk asset that is becoming a digital reserve asset in a world that is going down that path, and that has positive implications for its price.”
With that, McGlone maintains a price prediction of $ 100,000 in 2022.
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