The Federal Reserve’s hawkish turn at year-end saw cryptocurrencies gain some momentum, but it largely avoided other risk assets. Now, the Federal Reserve is playing a central role in the discussion about tokens in 2022.
How tight will Jerome Powell’s Fed tighten its policy to curb inflation? Analysts believe that the answer to this question will determine if Bitcoin can continue its record-breaking 60% gain in 2021.
Another school of thought believes that crypto will rise regardless of macroeconomic factors as more companies, such as Meta Platforms Inc. (formerly Facebook), and more consumers continue to invest in non-fungible tokens. Witness the sale of an NFT artwork at Christie’s last year for $69.3 Million, or the loosely organized group of crypto investors that fought billionaire Ken Griffin at an online auction for a copy of the U.S. Constitution.
On Tuesday, Bitcoin was trading at $46,100 in Hong Kong as of 9:52 AM. This is an increase of 0.2%. Here are four market-watchers discussing their outlook on the token and the wider crypto universe in 2022.
Bullish Bitcoin Technicals
Fairlead Strategies LLC founder Katie Stockton stated in an email that “we are bullish Bitcoin long term, based upon our long-term trend following gauges.”
“We believe that the long-term trend will continue and that a more decisive breakout would allow for an impressive, measured-move projection at approximately $90,000. A corrective phase is still in place, but there are signs of potential downside exhaustion.
The Fed and the Metaverse
“The No. “The No. 1 influencing factor in Bitcoin and cryptocurrency in 2022” Antoni Trenchev (managing partner at crypto lender Nexo), stated in an email. “Cheap money will be here to stay, which has enormous implications for crypto,” Antoni Trenchev, managing partner of Nexo crypto lender said in an email. “The Fed doesn’t possess the stomach or backbone necessary to withstand a 10%-20% fall in the stock market and adverse reactions in the bond markets.”
Trenchev predicts Bitcoin reaching $100,000 by June, despite the fact that he sees a slow 2022. Trenchev doesn’t think tokens like Solana or Avalanche will offer the same explosive gains as they did in 2021. However, he believes that these upstarts — awash of arrogance and attitude and funny narratives — will have to face the same scaling problems that Ethereum and older protocols had to overcome.
He wrote, “What I’m most excited about in 2022” “The ‘birth’ of and the use of metaverse is beautiful and has lots of potentials. It will be one of the major themes for next year: The metaverse, infrastructure building, and then NFTs that will form part of the economy.
Jeffrey Halley, Oanda Asia Pacific senior market analyst, said in an email that “I expect the speculative enthusiasm to continue in crypto space, but it, like bloated tech valuations, faces a much more difficult environment in 2022.” The Federal Reserve has begun interest rate normalization, with other central banks expected to follow suit. This will change the argument that crypto is an alternative fiat currency.
Halley stated that “Hanging over crypto space is the risk of more regulation and frankly with a new cryptocurrency coming out every week, which is ‘the next major thing’ driven by speculation, and not blockchain, it’s difficult to see how any one of them will be,” Halley added. “I believe that cryptocurrency is the most extreme case of financial-market groupthink stupidity in history.” While the music will continue to play for a good portion of 2022, the Emperor still doesn’t wear any clothes.
Waiting for an App Store
In an email, Philip Gradwell, Chainalysis’ chief economist, stated that “The race to be the crypto app store is on.” Web 2.0 taught us that users love platforms. I believe that Web 3.0 will not change that. There is currently no cryptocurrency platform that controls the customer relationship or aggregates suppliers. In 2022, I predict many companies will be racing to create this platform. Coinbase is the leader in the integration of DeFi and NFTs.
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