Bitcoin Keeps Bleeding And Nears $40K, 4 Scenarios For Q1 2022
10 Enero 2022 - 12:00PM
NEWSBTC
Bitcoin starts yet another 2022 week in the red with a 2% loss in
24 hours and a 13.5% loss in 7 days. The benchmark crypto has been
on a downtrend since the end of 2021 and could potentially dip
further due to macroeconomic factors. Related Reading | TA:
Bitcoin Key Indicators Suggest A Strengthening Case For More
Downsides At least, the above seems to correspond with the general
sentiment in the market. The U.S. Federal Reserve is turning more
hawkish due to a rise in inflation metrics, hitting new highs for
the first time in 40 years. Thus, turning potential price
expectations for Bitcoin bearish as many believe risk assets will
suffer in the short term from a shift in the FED’s monetary policy.
Economist Alex Krüger recently presented a thesis in favor of the
bulls. Via Twitter he said: This has been extraordinarily bearish
due to the speed of the Fed’s turnaround. Raising rates or tapering
quantitative easing (QE) should not be bearish enough to change the
upwards trend across assets. The economist claims the recent price
action to the downside has been triggered not just by the FED’s
intention to modify its policies in light of the rise in inflation
metrics, but mostly due to the speed in its decision. In a short
period, the U.S. financial institution changed its position from no
interest rates hike to several rate hikes planned for 2022, a
reduction in its asset purchase program, and balance sheet
normalization. The latter is the most bearish for global markets.
To normalize its balance sheet, the FED would begin a Quantitative
Tightening (QT) program which could lead it to sell around $50
billion worth of assets every month. Krüger added the following on
the potential implications for the crypto market: Simple. Crypto
assets are at the furthest end of the risk curve. Just as they
benefited from extraoridnarily lax monetary policy, they suffer
from unexpectedly tight monetary policy, as money shifts away into
safer asset classes. What’s Bitcoin Fate As FED Turns Hawkish?
Under these conditions, Krüger believes Bitcoin could follow the
following scenarios in the short term and through the first months
of 2022. Depending on the upcoming CPI metrics, to be published
this week, BTC’s price could react with a bounce or with a retest
of 2021 major support at the lows of $30,000. A high CPI would
trigger the latter, a low the former, but there is a higher chance
that Bitcoin could stay in its current range with another attempt
to reclaim the mid area around its current levels. This would put
BTC’s price close to $45,000 in the short term, but with more
uncertainty for Q2, 2022. Related Reading | Why Bitcoin Could
Frustrate Bulls And Bears In 2022 As of press time, BTC took
another sweep at the lows and re-visited the $39,000 levels only to
quickly bounce into $41,000. Remains to be seen if this price
action will be sustainable or if Bitcoin would return to lower
levels. In any case, 2022 will be a year full of surprises.
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