2021 turned out to be a less volatile year for Bitcoin, with only a 138% difference between its highest and lowest price. However, the price is moving up and down quite a bit, which gives investors plenty of entry and exit points to take profits.
With the regulation of the blockchain industry, the leading cryptocurrency is slowly penetrating the global financial world to jointly establish the post-pandemic era.
Overall, the price of Bitcoin rose, fell, and then rose again in 2021. Analyzing this process can help understand how the price will behave in the future. Of course, it should also be taken into account that certain news like in 2021 could have an impact on BTC.
For example, when El Salvador declared Bitcoin legal tender, it triggered a massive sell-off that resulted in a correction of 25%. The introduction of the Bitcoin Exchange Traded Fund (ETF) also increases volatility as it gives institutional investors the opportunity to access the leading cryptocurrency.
These developments, combined with many others, have helped form two important price levels that can help understand the future market value of Bitcoin.
Apparently the $ 30,000 area is the bottom as BTC tested it three times but never breached it decisively. Such market behavior proves that the bulls are quick to defend this support and are now likely to hold it in any future recession. Likewise, another important area of interest is $ 42,000 that will act as support and resistance in March, June, July, and December 2021. It is currently the crucial position for any upward or downward trend.
Daily BTC chart for the past 5 years
The 55-day Simple Moving Average (SMA) could also be a hindrance in 2022. Any time the price falls below the 55-day SMA after a rally in 2021, that SMA becomes a resistance. Meanwhile, the 200-day SMA is bearish. As such, both can help determine how long Bitcoin will last in the future.
Bitcoin is no different from any other asset in financial markets in terms of “seasonal” changes. So it is possible to look at the cycles of the previous season to understand how the price will behave in the future.
Looking at the Bitcoin chart for the past 5 years, September was one of the most painful months for the bulls. Hence, August or July can be the best months to take profits.
Bitcoin monthly chart for the past 5 years
Another strategy based on this seasonality is pivot points and support on Bitcoin’s price chart before September to identify potential entry levels after the sell-off. That way, the portfolio can be a little more defensive and investors avoid getting stuck in a trade than they are currently.
It can be seen that Bitcoin and other asset classes are becoming more and more interrelated, reflecting the degree of interdependence of cryptocurrencies in the global financial market system.
The best proof of this is the monthly survey by fund manager BofAML. Bitcoin is often named here as the top answer alongside stocks when asked where to invest in a risky environment. This has created a rule of thumb that at a time of global sentiment in favor of the risky asset, Bitcoin is seeing a surge in purchase volume. On the contrary, Bitcoin will be the first asset at risk when sentiment moves away from risk.
Monthly correlation index
With 2022 appearing to be the year the world will finally begin to live with COVID and its variants, expect global growth to improve and US stocks to rebound. Bitcoin can use this to enjoy huge upside potential over the next year.
Looking at the correlation matrix shows that Bitcoin has a very close relationship with Dow Jones Industrial (DJI). When US stocks hit new all-time highs or hit highs, BTC is also in the green about 60% (correlation 0.579) of the time.
The Fib retracement helps identify several key levels for Bitcoin in the future.
Thanks to growing interest from institutions, the king of cryptos is gradually becoming an asset used for portfolio rebalancing. According to a survey by Natixis Investment, around 28% of large companies have increased their exposure to cryptocurrencies. Additionally, several leading retail chains began accepting BTC payments, while VISA commented that “every bank should have a crypto strategy by 2022”.
As such, Bitcoin is slowly entering the realm of treasury management and becoming part of corporate and household balance sheets. Tesla, for example, is now keeping BTC on its balance sheet as an investment, prompting governments to discuss introducing a tax framework for cryptocurrencies as a form of legality.
Even newly elected local officials in the United States are pressuring the government to issue guidelines on this fledgling asset class. Mayor-elected Eric Adams did to speak that he wants to make New York the crypto capital of the USA and wants to have his first salaries paid in Bitcoin.
“We’re always on the rise in New York, so I’ll get my first 3 salaries in Bitcoin when I become mayor. New York is becoming the center of the crypto industry and other fast-growing, innovative industries. ”
The rise in adoption in the United States and Europe could have a bigger impact than China’s tough stance on banning cryptocurrencies and spurring a surge in demand next year.
A Bloomberg poll concluded that Bitcoin is on its way towards $ 100,000, but “it’s a matter of time, especially given the economic backdrop of growing demand versus falling supply”.
Other professional traders are also suggesting that BTC could hit $ 100,000 by the end of 2022, along with Matt Hougan, CIO of Bitwise Asset Management and Bobby Lee, CEO of Ballet Crypto.
A simple fib retracement level coupled with an annual upward move suggests that Bitcoin could even cross the $ 100,000 mark. Based on the price change between the 2021 low and high, the 2022 target is projected to be around $ 109,100.
If the fib retracement is established at this level, all the fibs will be pretty much the technical level of 2021. The best example is the 50% fib retracement which matches Bitcoins 2021 ATH at $ 68,991.
Bitcoin daily price chart for 5 years
Currently, Bitcoin is not only attracting private and institutional investors, but even the US government and other major powers. That would raise the crypto king price to $ 90,618 at 23.6% Fib. Once that is reached, a gradual decline in price is expected and more likely throughout the summer, with support activated at USD 60,000 at 61.8% Fib.
After rallying to $ 80,000, the seasonal sell-off will begin in September and drop to $ 70,000 at the 38.2% Fib level. BTC is then likely to hit an all-time high of around $ 110,000 in the fall. Predict that 2022 will end in a downward and sideways movement between $ 80,000 and $ 90,000.
Analyst Gregor Horvat also forecast a bearish correction for Bitcoin based on his Elliott Wave analysis:
“BTC has been in a strong rally since the low in March 2020, which in my opinion wave (III) will peak in April 2021, so the current price movement represents an irregular formation for wave (III).” (IV) can be a flat or even triangular pattern. Initial support in the triangle is at $ 35,000, followed by $ 25,000 sideways. These are critical support levels that will help Bitcoin continue to make new highs much higher. ”
Source: Gregor Horvat
You can see the BTC price here.
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Disclaimer: This article is for informational purposes only, not investment advice. Investors should research carefully before making a decision. We are not responsible for your investment decisions.
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