Will Bitcoin Go Up Again?
Cryptocurrency & Blockchain
The total market value of cryptocurrencies has plummeted since February 2021, with Bitcoin, in particular, losing 65 percent of its value from its peak in November 2021. People are curious about how low BTC can go. Several macroeconomic factors which worsened the crypto market could be used to explain this phenomenon and further predict the performance of BTC.
BTCUSD Chart (5Y)
According to the BTCUSD Chart (5Y) from TradingView, BTC dropped approximately 80% from its peak of $19,000 to $3,500 in the 2018 bear market. Cyclically, $61,000 in November 2021 could fall to $12,200 meaning that BTC will continue to drop. However, it will not drop to $12,200 and may stop around $15,000.
First, there are several reasons why bitcoin will not fall too low. Bitcoin’s decline is consistent with broader trends in the U.S. national economy. However, according to the interest rate policy of the Federal Reserve, the proportion of new economy industries in the United States increases. As the economy is less affected by the traditional energy industry, the possibility of a financial crisis and the risk of a great recession of financial assets including BTC is low.
Secondly, from the perspective of market sentiment and institutional funds, funds and ETFs in North America and Europe have increased the number of BTC holdings, FF (Founders Fund) entered the market with $5 billion, and CME added Ethereum options.
The flood of capital and exchange endorsements has supported bitcoin prices, preventing them from falling sharply.
There are also other factors why BTC may drop to $15,000. The annual inflation rate in the United States hit 8.6% in May 2022, the largest annual increase since 1981. With inflation rising, everyone is more likely to hold dollars and less likely to purchase cryptocurrencies. Therefore, BTC and other cryptocurrencies will continue to go down. Furthermore, according to BTC’s four-hour line on June 15th from CoinDesk, the top of each peak gets lower and lower. The first support is $22,900. If each peak gets weaker, a breakout is only a matter of time. Below $22,900 is $22,500. I think BTC will go to $18,000 at least. As to whether $18,000 is the bottom, we need to observe the follow-up trend. I would prefer a bottom around $15,000 to $18,000 as the market may not be as extreme as we expect.
BTC’s four-hour line, June 15th
In all, BTC will continue to drop but not drop too far as we can catch information from historical data and international news. Lastly, my guess would be around $15,000.
Written by Shihan Wang
