People who currently hold bitcoins or are planning to purchase them as a long-term investment are probably interested in what the immediate prospects for this cryptocurrency are. The editors of Profinvestment analyzed the situation, taking into account the opinions of experts and upcoming events related to “digital gold”. This forecast will help you make the right choice.
Important events for the Bitcoin cryptocurrency in 2020
2019 was generally positive for the Bitcoin exchange rate – the price of the currency approximately doubled over the year. 2022 promises to be no less eventful, and there are at least five reasons for this:
- Halving. Approximately every four years, the reward given for the found block for the blockchain is halved. For now it is 12.5 BTC, but will soon change to 6.25 BTC. Opinions about how this will affect the rate are divided into opposite ones - but if we proceed from previous halvings, then after them the value of the crypto asset always increased. In connection with the halving, some experts predict that Bitcoin will rise to $50,000 by the end of 2022.
- Schnorr/Taproot soft forks. According to the Bitcoin Core developers, they are already on their way and promise to be the most important updates in the entire history of the cryptocurrency. Forks are aimed at improving the interchangeability of coins and expanding the functionality of the network, which will contribute to the growth of interest in it.
- Strengthening the correlation between Bitcoin and gold. Both are expected to grow as investment assets - both could update their highs in 2022. This is partly due to the coronavirus outbreak, the Iran-US conflict and other events that are forcing people to look for alternatives to traditional money.
- Lightning Network. For several years now, the Lightning Network has been considered a convenient solution for faster and cheaper microtransactions, but 2022 could be the year it takes center stage. The fact is that the largest number of Bitcoin transactions are concentrated on cryptocurrency exchanges, and the Lightning Network can help reduce the load on the blockchain - which is important when, due to the halving, the volume of speculation will increase significantly.
- Institutional investors. Trust in cryptocurrencies is not formed overnight; it took years to gain. And now it is safe to say that many institutional investors are ready to accept Bitcoin and make large investments. In January 2022, the media cited calculations according to which in 2022 the amount of investments from investors in Bitcoin exceeded $600 million.
BTC's price surged earlier this year following tensions between the US and Iran, and some argue that the cryptocurrency has begun to play the role of a safe-haven asset like gold. However, others believe that the reason is the increased hashrate - more and more miners are adding their power to the network. The so-called crypto winter at the junction of 2022 and 2022 resulted in a drop in the hashrate of the Bitcoin network, but its further growth significantly outpaced the price increase.
Let's sum it up
Experts and members of the crypto community have differing opinions about what awaits BTC in 2022 . Unfortunately, no one knows what Bitcoin forecast the market will be able to realize.
In order not to miss the opportunity to make money on cryptocurrency, you need to always keep your finger on the pulse of events. Be the first to receive the latest news about the digital asset market using our Telegram channel.
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Bitcoin price forecast from analysts
Mostly, expert forecasts for the BTC rate are positive . Bitfinex technical director Paolo Ardoino believes that the price will not fall below $6,000, and by the end of this year it will be at least $20,000. Fintech investor Crypto Finance Mark Bernegger calls the minimum price $22,000, and the maximum – $55,000. He is convinced that mainly this indicator is influenced by the macroeconomic situation. Traditional investors are increasingly interested in cryptocurrencies as they offer good hedging opportunities.
Blockstream CEO Adam Back expects a long-term value of between $25,000 and $50,000. And the founder of the Binance crypto exchange, Changpeng Zhao, does not give specific forecasts, but believes that the crypto market will experience high volatility with a bias towards a bullish trend due to the influx of institutional investors.
BitMEX CEO Arthur Hayes named the minimum cost $3,000 and maximum $20,000. The lower limit is the break-even level for miners. And the upper one, which implies a return to the previous record high, will remain unchanged for some time when reached, after which it should break through higher.
McAfee Associates founder John McAfee predicts Bitcoin will reach $1 million by the end of 2022. According to him, the coin's prospects are increasing even faster than he expected. BitBull Capital CEO Joe DiPasquale is convinced that crypto transactions are the future, but there are too many influencing factors that make it impossible to predict the exact price of BTC. Over the next five years, he believes the rate could be anywhere between $10,000 and $100,000.
Matthias Dorta, founder of ICO-Informer, calls himself one of the Bitcoin bulls. He believes that by 2030, BTC will become the official reserve currency of at least several countries around the world, and this probability increases as we approach the final figure of 21 million. Currently, experts cite the lack of an adequate level of security as the main obstacle to the global adoption of cryptocurrency.
Writer and cryptanalyst Brandon Kittam is betting that Bitcoin will be worth $75,000 in 2020, with its market cap reaching $1.3 trillion. Fundstrat Global Advisors co-founder Thomas Lee's forecasts are much more modest - $25,000 by the end of the year.
Ethereum price forecast from December 15 to December 31, 2022
Ethereum has reached the lower boundary of the ascending channel and is currently trading at $3800, and here we have two options for the development of events.
We bounce off the lower border of the channel, similar to the previous correction, and continue to rise towards $5,000, as depicted in the chart below.
Source: Tradingview
Bearish scenario for Ethereum price in 2022
If the bears release the price to $3200, and ETH does not return to the ascending channel, but continues its downward corrective movement, then we can expect the appearance of a “Head and Shoulders” . The target of such a formation will be $1600 per 1 ETH followed by a sideways movement, as shown in the chart below. This accumulation cycle can last for several months and will be called a full-fledged bear market, during which 90% of traders will be washed away.
Source: Tradingview
Both options outlined in the charts are quite probable at the moment. The path we will take will be known in the coming weeks. At the moment, there are no strong factors behind such a massive dump; we are already in a highly oversold zone. Therefore, preference is given to the first option or the lateral movement option.
What does the Bitcoin exchange rate depend on?
Although Bitcoin is often compared to stocks or bonds, there are still significant differences. There is no corporation behind Bitcoin, which means there are no public balance sheets about the financial condition of the company to draw conclusions about the prospects of investing in it. Also, monetary policy, monetary inflation, etc. are not applicable to Bitcoin.
It follows that the value of cryptocurrency is formed due to a combination of such factors:
- Competition. Of course, Bitcoin is the most famous cryptocurrency, but besides it, there are dozens of other currencies and tokens, and each wants to win the interest of users. In terms of market capitalization, BTC still dominates by a large margin over its closest competitors.
- Supply and demand. The cryptocurrency protocol allows for the creation of a fixed number of new coins. New BTC appear on the market when miners form blocks from transactions, but the speed of their creation gradually slows down. Also affected is the total possible number of coins in the Bitcoin network - 21,000,000. Once they are all released, the price will depend on how easy it is to use BTC in various transactions, how legal and in demand this coin is.
- Use on exchanges. The more popular a crypto exchange becomes, the easier it is for it to attract new participants. And having “captured” a significant part of the market, it can dictate its own rules for adding certain currencies. If an exchange lists Bitcoin, then in most cases it complies with regulatory requirements, even though cryptocurrencies still operate in a gray area.
- Mining costs. Although bitcoins themselves are virtual, their mining requires very real electricity. During the mining process, complex mathematical problems are solved. The one who first brought the solution receives all the transaction commissions accumulated since the mining of the previous block, plus a portion of new coins. The more participants connect to the mining network, the more difficult the task becomes to maintain the conditional 10-minute interval between mined blocks. And accordingly, more electricity is consumed.
- Stability of management and forks. A fork is a change to the underlying software that results in the creation of a new currency on a separate blockchain. A soft fork is a minor change in the network that does not lead to the fork of a new currency. Bitcoin has no central authority and security is entirely up to the miners and developers. Forks usually split the Bitcoin community and create problems that need to be solved.
- Legal and regulatory issues. Regulators cannot decide how to classify such virtual assets. The Securities and Exchange Commission (SEC) classifies cryptocurrencies as securities, while the US Commodity Futures Trading Commission (CFTC) classifies BTC as a commodity. There is also a trend in the market towards using crypto as an underlying asset for futures, exchange-traded funds, etc.
The BTC market is also dependent on many other things, the news background. For example, if the government of a large country speaks out against the regulation of cryptocurrency, the price will fall (this was the case with China). The value also fell when the drug trading site Silk Road, which accepted BTC as payment, closed down. In some cases, the price can be deliberately driven down by “whales” - large traders who sell large volumes of cryptocurrency.
Conclusion
Unfortunately, the optimistic forecast for the Bitcoin exchange rate was not confirmed. It won't cross $100,000 this year. However, there are dozens of other projects that allow you to make a profit.
In all likelihood, coins will reach new historical values in the future. Owners of large funds and companies believe in BTC at $300–400 thousand, ETH at around $100,000 and BNB at about $10,000 in 5 years. Therefore, increase your assets and follow the development of the cryptocurrency market.
