Wednesday, January 26

Bitcoin at $ 100,000 or offered by the US Fed?

After an aggressive turn by the Federal Reserve took some of the steam out of crypto by year-end while largely avoiding other risky assets, central bank policy is playing a key role in the outlook debate. of tokens in 2022.

To what extent will Jerome Powell’s Fed tighten policy to curb inflation? The answer to that question will help determine whether Bitcoin follows its 60% gain in 2021 with another banner year, some analysts say.

Another school of thought holds that as companies from Meta Platforms Inc. (formerly Facebook) to Apple Inc. delve further into the metaverse and consumers continue to accumulate non-fungible tokens, that will see cryptocurrencies surge regardless of macroeconomic forces in the future. play. You only witness the sale last year of a non-fungible token (NFT) artwork for $ 69.3 million at Christie’s, or the loosely organized group of crypto investors who fought billionaire Ken Griffin in an auction for a copy of the US Constitution

Bitcoin was trading around $ 47,250 on Monday at 8:40 a.m. in New York, up 0.5% on the day. Here, four market watchers discuss their outlook for the token and the broader crypto universe in 2022:

Bitcoin bullish techniques
“We are bullish on Bitcoin over the long term, based on our long-term trend-following indicators,” said Katie Stockton, founder and managing partner of Fairlead Strategies LLC, in an email.

“We assume the long-term uptrend will hold and a more decisive breakout to new highs would allow for an impressive measured move projection of approximately $ 90,000. For now, a corrective phase is still in place, although there are possible signs of short-term downside exhaustion. ”

The Fed and the metaverse
“The number one influencer for Bitcoin and cryptocurrencies in 2022 is central bank policy,” Antoni Trenchev, managing partner at cryptocurrency lender Nexo, said in an email. “Cheap money is here to stay, which has huge implications for cryptocurrencies,” as “the Fed does not have the stomach and backbone to withstand a 10% -20% collapse in the stock market, coupled with a adverse reaction in the bond market. ”

Trenchev sees a choppy 2022, but predicts that Bitcoin will hit $ 100,000 by the end of June. He also doesn’t expect tokens like Solana and Avalanche to deliver the same exponential gains they did in 2021, but rather that “these upstarts, awash in hubris, attitude and funky narratives, will face the same scale challenges as Ethereum and other older protocols. faced. ”

“What I’m really excited about in 2022 is the metaverse,” he wrote. “The ‘birth’ and the use of the term metaverse is a beautiful mess and has a lot of potential. It will be one of the overarching themes for next year: the metaverse, building infrastructure, and then the NFTs that will be part of the economy there. ”

The skeptic
“While I expect speculative zeal to continue in the crypto space, this one, like inflated tech valuations, faces a much more challenging environment in 2022,” said Jeffrey Halley, senior market analyst at Oanda Asia Pacific, in an email. . “The main reason is the start of interest rate normalization by the Federal Reserve, but other major central banks are likely to follow as well. That will challenge the rationale that cryptocurrencies are an alternative to fiat money. ”

“Hanging out in the crypto space is the threat of further regulation and frankly with a new coin coming out every week which is ‘the next big thing’ and driven by speculation and not blockchain, I am fighting for see how any of them will do it. be, ”Halley said. “I still believe that cryptocurrencies are the biggest case of group stupidity in the financial market in history. The music may continue to play for part of 2022, but the emperor is still wearing no clothes. ”

Waiting for an app store
“The race to be the app store for crypto has started,” Philip Gradwell, chief economist at Chainalysis, said in an email.

“An important lesson from Web 2.0 was that consumers love platforms and I don’t think that’s going to change for Web 3.0. There is currently no encryption platform that owns the customer relationship and adds vendors. I predict that in 2022, many companies will compete to build this platform, with Coinbase leading the way as it integrates DeFi and NFT. ”

© 2022 Bloomberg LP

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