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According to a Bloomberg Intelligence report, while Bitcoin has dropped nearly 30% from a record high in November, it is in a consolidating bull market and is approaching $ 100,000. The document states that it is unlikely that BTC’s bullish gains have stalled and predicts that a fixed supply will support the rise in prices.
“The key question facing Bitcoin in early 2022 is whether it is a peak or just a consolidating bull market,” the report said. “We believe this is the latter, and we see the flagship cryptocurrency slowly evolving into global digital provisioning in a world that is on this path.”
The report also highlights how this year’s adjustments have made the asset stronger and its bull market healthier as Bitcoin weathered and overcome the mining ban in China to hit new highs. In addition to breaking past highs in November and hitting $ 69,000, Bitcoin’s network hashrate also recently hit a new all-time high, demonstrating the deep resilience of its consensus protocol.
“Bitcoin seems to be on a $ 100,000 trajectory. We see it as more of a matter of time, in particular because of the economic foundations of an increase in demand versus a decrease in supply, ”the report says.
Further mass adoption will increase the demand for Bitcoin, and the development of new ETFs and futures and legal tender status in El Salvador are examples of this process. As BTC output shrinks and awareness rises, prices are expected to rise and volatility is expected to decrease, according to the report.
Clearer regulation of Bitcoin in the US could also increase its acceptance among certain types of investors and help meet even higher demand for the asset. The report says the next year could be a pivotal year in that regard, as the country seems set to embrace cryptocurrencies with more detailed legislation and a deeper understanding of technology on the part of government officials.
Monetary policy can also play a role, especially if a tightening of the Federal Reserve’s measures ultimately leads to a stock market crash, prompting the central bank to turn the ship the other way.
“The main force that will change expectations of the Federal Reserve’s tightening in 2022 is the stock market plunge, which could be a win-win for Bitcoin,” the report said, adding that the flagship cryptocurrency “is on track to become a digital store of value. “.
Bitcoin will face a headwind if the stock market falls, but to the extent that declines in stock prices put pressure on bond yields and stimulate increased central bank liquidity, crypto could be the main beneficiary.
The report also mentions the failure of US Treasury bonds to hold above 2% despite widespread consensus for higher yields, a phenomenon that could lead to a deflationary environment in Bitcoin’s favor next year.
Source: Bloomberg Intelligence.
Bloomberg Intelligence explained that funds are moving away from “old analog gold” towards Bitcoin.
“The question for 2022 comes down to a reversal or acceleration of these flows. As bond yields are declining, we are leaning towards the latter, ”the report says.
Bloomberg added that Bitcoin’s fixed supply, backed by declining emissions every four years, could help it outperform stocks again next year, giving it an edge over an expanded stock market that hasn’t had a 10% correction since the 2020 crash.
Posted by Newt Salamander, Analyst at Freedman Club Crypto News
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