Expert investors are concerned that bitcoin will drop by 50% to $10,000 by the end of the year since cryptocurrency is still under a lot of pressure.
Given the continued pressure on the cryptocurrency, Bitcoin might fall as low as $10,000 this year.
According to a Bloomberg survey of 950 investors, 60% think that bitcoin, which is now trading at around $20,000, may lose half of its value.
As central banks and governments raise interest rates and terminate loose monetary policies, bitcoin and other altcoins have taken a beating recently.
Retail investors were found to be more sceptical about cryptocurrencies than their institutional counterparts, with roughly a quarter labelling the asset class as “garbage,” according to the poll.
Since peaking at about $69,000 in November, Bitcoin has dropped more than two-thirds of its value, and it hasn’t traded below $10,000 since September 2020.
As the US prepares to release June inflation figures this week, the situation might worsen, opening the door for the Federal Reserve to raise rates even harder and quicker.
Inflation is expected to increase to 8.7% in June from 8.6% in May, according to economists.
Venture capitalist Jared Madfes stated: “It is very simple to be fearful right now, not just in crypto but generally in the world.”
“It reflects people’s inherent fear in the market.”
In addition to macroeconomic considerations, Martin Hiesboeck, head of blockchain and crypto research at Uphold, claims that investors are concerned about the long-term health of the cryptocurrency market after many key companies recently sought to stop losses, slashed staff, and blocked withdrawals. According to him, the retreat in the crypto ecosystem is not the biggest threat to the price of cryptocurrencies; rather, it is factors which contribute to the challenging macroeconomic environment.
“The market remains vulnerable and on edge, not necessarily by threats from more crypto projects going bust but from the difficult economic situation we are facing right now,” Hiesboeck says. “In other words, the price of bitcoin depends more on the supply of gas to Germany as it does in any crypto-related news or metric.”
Experts predict that in the next weeks and months, volatility will certainly increase as a result of the war, inflation, and changing monetary policy in the U.S., all of which have no apparent end in sight.
Over the previous six months, Bitcoin has only briefly risen over $45,000, and it hasn’t reached $50,000 since 25th December 2021. Despite the ups and downs, Bitcoin’s price is now a long way from its most recent record high, which it reached in November when it surpassed $68,000. Bitcoin is still worth more than twice as much as it was only a few years ago, despite the current price decrease. These drastic variations in price are nothing new for Bitcoin.
Despite the turbulence and recent price decline, a lot of experts still believe that Bitcoin will eventually surpass the $100,000 threshold, but they have different predictions for when that will happen. Additionally, according to recent research by Deutsche Bank, roughly 25% of Bitcoin investors predict that in five years, the price of the cryptocurrency will exceed $110,000.
The volatility is nothing new, and it’s a major factor in why experts advise novice cryptocurrency investors to exercise great caution when designating a portion of their portfolio to digital currencies. The value of Bitcoin has increased steadily over time, just like that of every other cryptocurrency available. It makes sense for Bitcoin investors to be interested in how high the currency will eventually go.
Unfortunately, compared to other well-established asset classes, Bitcoin’s price is much harder to forecast and more vulnerable to market forces.
Bitcoin Price Predictions
After falling from its most recent all-time high last November, the price of Bitcoin was easy to forecast at $100,000 late last year. The prediction game has become much more difficult after Bitcoin’s significant decline.
The most ardent cryptocurrency naysayers anticipate that Bitcoin will crash to as low as $10,000 in 2022. However, a more reasonable position could be to believe that Bitcoin can still rise to $100,000 as many experts predicted late last year, although on a longer timescale.
“The most knowledgeable educators in the space are predicting $100,000 Bitcoin in Q1 2022 or sooner,” Kate Waltman, a New York-based certified public accountant who specializes in crypto, said back in November 2021.
But now that huge companies like Nike and other well-known brands are investigating into methods to monetise their goods in the virtual metaverse, optimistic analysts are re-evaluating the cryptocurrency market as a whole. The popularity of altcoins is growing, which has altered investors’ perceptions of Bitcoin (the original cryptocurrency) as a result of the emergence of metaverse games, worlds, goods, and experiences.
Many experts prefer to focus on the pattern of Bitcoin’s value rising over time rather than making specific numbers and date predictions. Jurrien Timmer, director of global macro at Fidelity Investments, projected in October that investors can anticipate a “pretty sustainable” growth in Bitcoin’s long-term value driven by organic market activity, with the $100,000 milestone in sight.
What Influences Bitcoin’s Price
Normal economic factors influence the price of cryptocurrency just like any other currency or investment — supply and demand, public sentiment, the news cycle, market events, scarcity, and more.
As a new and emerging asset, additional factors influence Bitcoin’s value more than the average currency or security.
Scarcity
There are only 18 to 19 million Bitcoins currently in circulation, and minting will stop at 21 million. Industry experts consistently point to this built-in scarcity as a big part of cryptocurrency’s appeal.
“There’s a fixed supply but increasing demand,” says Alexis Johnson, president of the blockchain public relations and events company, Light Node Media.
Other experts point out Bitcoin has value because people give it value. “That’s really why everybody’s buying — because of the psychological aspect,” says Nelson Merchan, Johnson’s Light Node Media co-founder. That can make it difficult for the average consumer to discern whether Bitcoin and other cryptocurrencies are legitimate. The whole concept of supply and demand only works when people want something scarce — even if it previously didn’t exist.
“It actually does almost kind of seem like a scam,” Merchan says about Bitcoin’s origins. Though he says he’s seen his crypto holdings reach millions at times since he began investing in 2017, he’s also seen them disappear in an instant.
“I’m a big believer that if it’s not in cash, you don’t really have that money because, in crypto, anything can drop dramatically overnight,” Merchan says. This is why certified financial planners suggest only allocating 1% to 5% of your portfolio to crypto — to protect your money from volatility.
Mainstream Adoption
One of the main factors driving the price increase of Bitcoin is the rate at which new consumers are buying and exploring cryptocurrency.
Crypto technology is being adopted at a faster rate than humans first adopted internet technology, assuming it continues, the compounding acceleration of new adoption could keep pushing the value of Bitcoin and altcoins higher and higher.
Cryptocurrency adoption has been increasing at an annual rate of 113%, according to data from the digital asset management firm CoinShares. (Meanwhile, people adopted the internet at a rate of 63%.) If people warm up to cryptocurrency at a comparable rate to that of the internet’s early days (or faster), the report makes the case that there will be 1 billion users by 2024 and 4 billion users by 2030.
CoinDesk reported last month the number of new wallets worldwide increased 45% from January 2020 to January 2021, to an estimated 66 million. Popular crypto exchange Coinbase says it has now over 73 million worldwide users, while fellow exchange Gemini recently released its “State of US Crypto Report,” which found that 21.2 million Americans own cryptocurrency of some kind.
Watch This Space
The internet has been the fastest adopted technology of all time! We are now seeing the phenomenon of cryptocurrency being adopted at DOUBLE the rate of the internet. You have been told!
online sources: thisismoney.co.uk, blopomberg.com, time.com
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