Introduction: In this article Author Nicole Willing discusses Bitcoin and weather or not it can reach new highs in 2022.
EverGrow and SafeMoon are great crypto projects. But have crypto inventors forgotten about Bitcoin? Will bitcoin price reach new highs in 2022 and beyond?
The bitcoin (BTC) price fluctuated a lot the past year, as the world’s largest cryptocurrency spiked to all-time highs followed by sharp corrections. Since the most recent selldown in November, BTC still hasn’t recovered.
In the most bullish forecasts, bitcoin was expected to reach $100,000, but it fell below $50,000 in the fourth quarter and ended 2021 with a return of 59.7%.
While the use of bitcoin as a means of payment expanded in 2021, it predominantly remains a store of value for investors looking to diversify their portfolios beyond stocks, bonds and other assets. Bitcoin also attracted unprecedented interest from institutional investors in 2021, which was accelerated by the launch of the first bitcoin exchange-traded fund (ETF) in the US in October. And El Salvador became the first nation to adopt bitcoin as an official currency, subsequently announcing plans to build a “Bitcoin City” powered by geothermal energy from a volcano.
What’s the outlook for bitcoin as an investment in 2022? In this article we look at the latest bitcoin projections.
Bitcoin activity reaches record levels
Bitcoin saw historic price action in 2021, starting the year at $28,994.01 after surpassing its previous all-time high of $20,000 in December 2020. The bitcoin price trend was higher throughout the first quarter, hitting the key $50,000 in February and after a brief retreat soared again in March and April to reach $64,863.10 on 14 April, as bullish sentiment took hold. The market then collapsed in May, declining over the spring and bottoming out at a low of $29,360.96 on 20 July.
Bitcoin rallied again over the summer, moving back above the $50,000 level in September as a short squeeze moved the price higher. After a dip back to $39,787.61 on 21 September, bitcoin soared again in October, and reached a new all-time high of $68,789.63 on 10 November, a peak that still stands.
Despite the retreat, the 13th anniversary of the creation of the first block on the Bitcoin blockchain at the start of January 2009 saw the Bitcoin network hash rate – referring to its processing power – reach a new all-time high of 207.53 million tera hashes per second on 1 January, data from YCharts shows.
The number of BTC holders also reached new highs in 2021, data from analysts at Santiment shows. The previous record was set on 14 December 2017, when 1.28 million unique addresses sent or received bitcoin. The number of daily active addresses reached a new high of 1.34 million on 6 January 2021, when the BTC price reached $36,000 and set another new high of 1.36 million on 15 April, which remains the one-day record.
“With its mean daily addresses at 989,000 – or just short of 1 million addresses/day – this was also the strongest year to date for Bitcoin’s address activity,” Santiment analysts said. “As we close out the year, Bitcoin is once again showing negative network momentum in the short term, recording a -38% drop in daily active addresses over the last 3 weeks. If history is to judge, we should see a fresh wave of wholesale activity on the Bitcoin network to be fully convinced that another sustainable, historic rally is obtainable.”
Institutional interest in bitcoin grew during 2021, as asset managers looked to diversify their client portfolios into the cryptocurrency markets. Digital asset investment products saw inflows of $9.35bn up to 17 December 2021, with bitcoin accounting for $6.36bn, according to data collated by CoinShares. Assets under management (AUM) totalled $63bn, with bitcoin accounting for $40bn.
While the emergence of decentralised finance (DeFI) has centred around the Ethereum blockchain, it has enabled the tokenisation of assets, including BTC. Users are now able to deposit tokenised BTC on decentralised exchanges to earn yield by providing liquidity. The number of tokenised bitcoin on the Ethereum blockchain soared during 2021 to reach 323,000, from 141,000 at the end of 2020, according to Sanitment, accounting for 1.7% of total BTC supply.
Can bitcoin return to the previous high in 2022 or will the price remain under pressure? What do analysts’ predictions indicate?
Bitcoin price prediction for 2022 and beyond
Software company MicroStrategy has made bitcoin a key asset on its balance sheet, holding a total of 122,478 BTC, as of 10 December. In a presentation to investors in December 2021, the company was bullish in its bitcoin outlook, stating that it is “still early” in the price cycle, as the cryptocurrency “is a very fraction of [the] world’s assets” and growing adoption will continue driving the price higher.
The presentation cited BTC price analysis from investment companies, including Ark Invest, Citibank, Fidelity and JP Morgan, which have issued long-term price forecasts ranging between $100,000 and $500,000.
For the short-term, the $50,000 mark has again become a key level for bitcoin to reach. On 30 December, analysts at Dutch investment bank Saxo noted that there was technical support at $46,000 down to $45,000, with resistance at $50,000 up to $53,000. “The bias is still for higher levels and we look for any dips to be limited. Risk/reward is ample to call a buy trade.”
Analysts at Santiment are cautious on the near term outlook for the future bitcoin price, noting: “On the whole, we seem to be seeing a strong shift back to dormancy for many BTC holders, which may present an obstacle to a strong price recovery – at least in the very short term… One possible exception to this is Bitcoin’s NVT ratio, which continues to flash green.”
“Bitcoin’s NVT ratio continues to look semi-bullish for the time being, though even this is predominantly a function of its market cap declining rather than any recent spike in general on-chain activity,” the analysts wrote.
Bitcoin technical view and price targets for 2023, 2025, and 2030
Technical analysis from CoinCodex was bearish at the time of writing (3 January) as BTC was trading around $47,277, with 16 indicators showing ‘sell’ signals compared with 12 bullish signals.
The 10- to 200-daily exponential moving averages (EMAs) and simple moving averages were bearish, while the five-day EMA and SMA were bullish. The Hull moving average was giving a ‘buy’ signal, while the volume-weighted moving average was bearish. CoinCodex had a bitcoin price target of $48,819 by 8 January, up by 3.29%, the data showed.
Wallet Investor’s bitcoin forecast for 2022 was bullish (as of 3 January), predicting that the price will trend higher during the year to surpass the previous high in October and reach $77,430.10 at the end of 2022. For the longer term, the algorithm-based forecasting site predicted that the BTC price will climb to $108,976 by the end of 2023 and $171,285 by the end of 2025. By January 2027, the price could reach $203,020 the data showed.
The BTC price prediction from DigitalCoin had the coin averaging $65,388.13 in 2022 and $102,588.57 in 2025, rising to $203,732.19 in 2029 with a peak at $212,478.84 based on historical data.
The long-term bitcoin forecast from Price Prediction was the most bullish, projecting that the price will average $200,215.41 in 2025, up from $68,538.84 in 2022, and soar to $1,883,603.43 in 2030.
It’s important to keep in mind that cryptocurrency markets remain extremely volatile, making it difficult to accurately predict what a coin’s price will be in a few hours, and even harder to give long-term estimates. As such, analysts and algorithm-based forecasters can and do get their predictions wrong.
We recommend that you always do your own research, and consider the latest market trends, news, technical and fundamental analysis, and expert opinion before making any investment decision. Keep in mind that past performance is no guarantee of future returns. And never invest more than you can afford to lose.
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The difference between trading assets and CFDs
The main difference between CFD trading and trading assets, such as commodities and stocks, is that you don’t own the underlying asset when you trade on a CFD.
You can still benefit if the market moves in your favour, or make a loss if it moves against you. However, with traditional trading you enter a contract to exchange the legal ownership of the individual shares or the commodities for money, and you own this until you sell it again.
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