Bitcoin bulls see $100,000 price target in sight despite drubbing | Crypto News

Bitcoin is taking a beating this week as the Federal Reserve prepares to remove the stimulus, but the bulls are feeling as emboldened as ever.

The largest cryptocurrency by market value has lost around $ 80 billion since the beginning of the year amid a slide that took it to its lowest levels since its sudden crash in early December. But predictions have emerged that it may still hit the $ 100,000 level sometime this year.

It would have to more than double the current levels of around $ 42,900 to reach that milestone. Analysts say it’s not that it can’t – it’s posted plenty of triple-digit annual returns over the past decade – but that the road ahead could be tougher for cryptocurrencies with a more aggressive Fed.

“Cryptocurrencies have benefited from the Fed’s massive injections of liquidity since 2020,” said Matt Maley, chief market strategist at Miller Tabak + Co. “He pushed these assets too far, too fast.”

Along with riskier assets like U.S. stocks, Bitcoin and other digital assets fell on Wednesday after minutes from a recent Fed meeting showed officials were willing to withdraw stimulus earlier than many had. expected previously.

The statement pointed to earlier and faster rate hikes by the central bank, which would increase the cost of capital throughout the economy. That has the potential to keep investors away from cryptocurrencies, many of which have posted huge gains in the past two years amid heightened stimulus.

But not everyone agrees that this environment is lousy for cryptocurrencies. Bitcoin is a risky asset that is becoming a digital reserve asset in a world that goes that way, and that has positive implications for its price, according to Mike McGlone of Bloomberg Intelligence.

The coin “is heading towards $ 100,000,” he wrote in a note. “Cryptocurrencies are among the most risky and speculative. If risk assets decline, it helps the Fed fight inflation. By becoming a global reserve asset, Bitcoin can be a primary beneficiary in that scenario. “

Still, that hasn’t stopped other industry players, like Messari Inc. co-founder Ryan Selkis, from scoffing at the basis for some of the soaring predictions.

And earlier this week, Goldman Sachs analyst Zach Pandl wrote that Bitcoin could hit $ 100,000 if it continues to take gold market share.

Bitcoin has been singing the tune of the stock market lately, with the coin’s 100-day correlation coefficient and the S&P 500 now at 0.44. That’s the highest reading since Q4 2020. A coefficient of 1 means that assets are moving in unison, while minus 1 would show that they are moving in opposite directions.

“Now that this stimulus is going to be less abundant more quickly than the markets had been thinking, it makes sense that these assets are falling along,” Maley said.

Graph showing a positive correlation between Bitcoin and stocks

Lindsey Bell, director of markets and currency strategist at Ally, says investors were already nervous at the start of the year due to uncertainty about the Fed’s monetary policy trajectory.

“People are reassessing the risk they want to take,” he said by phone. It doesn’t help that the dollar has also strengthened, which serves as a reminder to crypto investors that โ€œit’s still the world’s currency and it’s still very strong and it’s not going anywhere, so there’s no need to hide your money. under your mattress or in cryptocurrencies. “

Greg Bassuk, CEO of AXS Investments, an asset manager that focuses on alternative investments, says that Bitcoin should comprise a portion of an investor’s portfolio.

“We are very optimistic about Bitcoin and digital assets that get over all the noise, day by day,” he said in an interview. “Digital assets will be treated in the longer term like commodities, stocks and bonds, and real estate and other more traditional asset classes in the coming years.”

โ€“With the help of Lu Wang.


Leave a Comment