Bitcoin has had a slow start to the year. Experts still predict it will reach $100,000, but it is more of a matter when than if.
Bitcoin’s price dropped to near $38,000 Friday as investors struggle with rising inflation, geopolitical tensions or the possibility that the U.S. Federal Reserve will tighten its monetary policy. The crypto market has closely followed the stock market over recent months, making it even more intertwined in global economic factors such Russia’s War in Ukraine.
Minutes from the Fed’s March meeting showed that its plan was to shrink its debt by $95B each month to fight inflation. The most recent inflation report shows that consumer prices rose 8.5% during the year ended March.
Experts believe that volatility will only increase in the weeks and months ahead, with no signs of an end to war, inflation, shifting monetary policy and the U.S.’s changing monetary policy.
Armando Aguilar heads alternative strategies and research at Ledn, a digital asset trading and credit platform. “The overall market has noted the high correlation with Bitcoin and other equities markets,” he said. “The largest correlations with Bitcoin were found in the S&P 500, NASDAQ and NASDAQ, at 0.88% and 0.91%. The correlation between two means that they move equal one to the next.
Bitcoin has been at $45,000 only for a short time in the past four months. It hasn’t been higher than $50,000 since Dec. 25, 20,21. Bitcoin has maintained its above-average 6-month low of $34,000 in February. Despite the ups-and-downs, Bitcoin’s current value is still far below the November high of $68,000. Despite this recent decline in Bitcoin’s value, it remains twice as valuable today as it was two years ago. These types of ups, downs, and other fluctuations are normal for Bitcoin.
Despite recent volatility and a slumping price, experts still believe Bitcoin is well on its way towards reaching the $100,000 mark. However, different opinions exist on when that will occur. Deutsche Bank’s recent Cryptocurrency prices & charts study found that around 25% of Bitcoin investor believe Bitcoin prices would reach $110,000 in five-years.
Experts warn that volatility is not a new phenomenon and that investors who are new to crypto should be very careful when allocating cryptocurrency in their portfolio. Bitcoin’s value has risen steadily over the years just like every other cryptocurrency. Bitcoin investors can only be curious to see how high it could eventually rise.
Bitcoin’s prices are difficult to predict. They are also more susceptible to market forces than other asset classes. But, we decided not to give up and ask experts for their best guesses. Here’s their take:
Predictions about Bitcoin Prices
It was easy to forecast a Bitcoin price of $100,000 last year, after it reached its new all-time high in November. Even more challenging is the prediction game given Bitcoin’s recent fall.
Although the extreme crypto skeptics predict that Bitcoin will drop to $10,000 in 2022 and then tank, some experts believe there might be a middle ground. They say that Bitcoin can still rise to $100,000 as predicted by many experts late last year.
“The most skilled educators in the area are predicting $100,000 Bitcoin by Q1 2022 or earlier,” Kate Waltman from New York, a certified public accountant who specializes is crypto. We listened to her tell us back in November 2020.
However, bullish specialists are now re-evaluating crypto industry. Major corporations like Nike and others are looking for ways to monetize the digital metaverse. The popularity of metaverse games and worlds is increasing, which has altered investors’ opinions about Bitcoin (also known for being the original crypto).
Many experts are hesitant about predicting a date and a number. However, they do see a trend in Bitcoin’s value increasing over time. Investors should anticipate a “pretty durable” increase in Bitcoin’s long term value due to organic market movement. Jurrien Timmer, global macro director at Fidelity Investments last October, said that investors can expect the $100,000 threshold to be in close-sight.
Kiana Dnial, founder of Invest Diva is the author of “Cryptocurrency Investing For Dummies”.
Here are some additional predictions we discovered, ranked in order of low to high over next year.
Viewpoint: Bitcoin investor. Token Metrics is a media and crypto research company.
Prediction: Bitcoin could go up to $100,000-$150,000 but the timeline is not clear
Why: While Bitcoin is in a bearish cycle, the whole crypto market as well as other crypto asset types are not. Although Bitcoin was the initial cryptocurrency, many others have taken its place in innovation as the “Web 3” (aka the new internet built around blockchain). Bitcoin will eventually rebound due to hype and new altcoins.
Point of view: Technical analysis & Blockchain data analyst
Prediction: Bitcoin may reach $100,000 in 2022
Why: While the Bitcoin price in January 2022 is close to what it was in January 2020, there is still a demand for altcoins. Hyland also stated that Bitcoin supply is leaving major exchanges, presumably to be stored in offline cryptocurrency wallets. Also, Hyland tweeted that a plunge below $40,000 could trigger a “freefall” into a Bitcoin bearish.
Parallax Digital’s CEO and founder.
Prediction: $307,000 to October 2021 (now completed) and $12.5million by 2031
Why: The inflationary pressures that follow COVID-19 are expected to drive interest in cryptocurrency, Breedlove stated earlier this year in an interview. He also said that the value of Bitcoin will rise higher than any previous projections. Breedlove, a crypto enthusiast who is known more as a philosopher, speaks frequently about the wider social implications that crypto has as a form transparent, decentralized currency. However his price predictions have not always been accurate.
JPMorgan predicts a long-term high at $146,000 while Bloomberg predicts it could reach $400,000 if rates are comparable to the past.
Even if Bitcoin reaches $100,000, it is important to keep your focus on your overall portfolio. This includes passive index funds as well as emergency savings. Retirement accounts are also good options.
What is the Influence on Bitcoin’s Prices
Normal economic factors have an impact on the price of cryptocurrency, just like any other currency, investment or currency. They include supply, demand, public sentiment, news cycle, market events and scarcity.
Bitcoin’s price is determined by many factors, including the fact that it is a new asset. Here are some:
There are only 18-19million Bitcoins currently in circulation. The 21 million mark will be the end of minting. This inherent scarcity has been cited by industry experts as an important part of cryptocurrency’s appeal.
Alexis Johnson (president of Light Node Media), says that there is a fixed supply and an increasing demand.
Other experts agree that Bitcoin is worth its value because it is valued by people. Nelson Merchan of Johnson’s Light Node Media founder, said that “that’s really why everyone’s buying — due to the psychological aspect”. This can make Bitcoin and other cryptocurrencies difficult to identify for consumers. Supply and Demand only works when people are in desperate need of something, even though it may not have existed previously.
Merchan describes Bitcoin’s origins as “almost like a scam”. Although he claims that his crypto holdings can reach millions in times since he invested in 2017, he also says they have disappeared in an instant.
Merchan states that “I strongly believe that if it isn’t in cash, it’s not really your money.” Because crypto can plunge dramatically in an instant, Merchan adds. Certified financial planners advise that you only allocate 1%-5% of your portfolio to crypto to protect it from volatility.
Waltman claims that Bitcoin’s price has risen due to the rapid growth of new cryptocurrency buyers.
“Crypto technology adoption is increasing at a much faster pace than when people first started using internet technology,” she said. If it continues, the acceleration of new adoptions could continue to push Bitcoin’s price higher.
According to CoinShares data, the annual growth rate for Bitcoin adoption has been 113%. (In contrast, 63% of people adopted the internet at a slower speed. If Bitcoin is adopted by people at a rate comparable to the internet’s early days, or faster, the report suggests that there will be 1 Billion users by 2024 and 4 Billion users by 2030.
CoinDesk last month reported that the number worldwide of new wallets increased by 45% over January 2020 to January 2021. This brings it to an estimated total of 66 million. Coinbase, a well-known crypto exchange, has more than 73,000 users in the world. Gemini’s “State of U.S. Crypto Report,” released recently, which revealed that 21.2million Americans own some cryptocurrency.
In recent months, the Federal government has made it clear that they are paying careful attention to cryptocurrency. In recent months, industry professionals have alluded to the fact that Bitcoin’s falling price could be due to what crypto experts consider “hawkish” federal regulations. CoinDesk First Mover Seth Ginns said that “the Fed moved toward a hawkish posture [on crypto regulations] just as Omicron started tick up in the U.S.” which could have increased doubts in crypto as a viable investment–resulting in January’s bearish sentiments.
The regulation of cryptography raises many questions. President Joe Biden has signed an infrastructure bill that will require all cryptocurrency exchanges to notify IRS of any transactions. Janet Yellen from the Treasury Department recently suggested that all stablecoins linked to the U.S. currency should be subjected for federal oversight.
Flourish published a white paper on industry regulations that stated that regulatory policies are “patchy.” Flourish is a fintech platform created for investment advisors. Any new regulation that affects cryptocurrency, which is a relatively young asset class, has the potential to have an impact on its market value.
In September 2021, China banned crypto. Investors saw Bitcoin’s value drop. However, it has since risen and is back to its normal volatility. Even though there is more than a decade worth of precedent for Bitcoins, the Securities and Exchange Commission makes all decisions on a base-by-base basis. This is what experts call “crawl and walk, run” strategy to mainstream crypto adoption.
“Regulation has evolved over the past five year,” said Ben Cruikshank from Flourish. However, regulators can always change their mind.
A cycle called halving is also a major factor in Bitcoin’s price. Although the process is complicated and algorithmic it basically means that the Bitcoin mining reward will be cut in half.
The rate at what new coins are issued can be affected by the halving. This can impact the price of Bitcoin assets. Historical data shows that halvings are closely associated with boom-bust cycles. Some experts attempt to predict these cycles even as early as the day after a Halving Event ends.
What investors Need to Know about Bitcoin Price Projections
Financial advisors and experts caution you against allowing Bitcoin’s price fluctuations dictate your investment decisions. Study after study has shown that ETFs and passive index funds with a consistent contribution to them perform better over the long-term. This strategy is called dollar cost average.
Experts don’t recommend investing more than five percent of your portfolio in crypto. Never invest at the cost of saving money and paying off high-interest debt. It is easier to save for retirement and build wealth over time if you have diversified investments, such as low-cost Index Funds.
Experts even say that crypto can be used in a set-it and forget-it manner. Sarah Catherine Gutierrez, an Arkansas-based certified financial advisor, states that passive investing is a viable way to attain financial goals.
Most people are still unfamiliar with crypto. It is a good idea not to rush to invest your money. We have only about 10 years’ worth of data for crypto price predictions. Bitcoin is also highly volatile, with the possibility of it rising long-term.
Volatility makes it difficult to see the “what and “why” behind your cryptocurrency strategy. Before you invest in Bitcoin, or any other asset, consider what you hope to achieve by participating in this highly volatile market. This will help to stay focused.
Gutierrez stated that people don’t seem to understand how to value Bitcoin. “When you buy it, you should know what you can expect to get in return.”
Gutierrez asserts that financial planners have no bias against cryptocurrency, even if a client expresses interest in learning more. It is worth asking yourself if crypto is part of your overall plan. Gutierrez claims that most cases will not require crypto.
“Our view is that Bitcoin isn’t necessary for financial goals,” she states, noting that people should choose simple and easy ways to invest. This will allow you to stay on track with your core financial goals while also allowing you to better position yourself for a successful retirement.
Bitcoin has had a slow start to the year. Experts still predict it will reach $100,000, but it is more of a matter when than if.