Where is the price of bitcoin heading this year? That is one of the most heavily debated topics in the market at the moment, and also a question that each one of us has been wondering as well. The truth to that question is that no one actually knows, but it doesn't make it any less fun to ask and discuss. Today we will talk about what obstacles bitcoin needs to overcome, to beat out this price ranging that has been happening for the last several months. One thing is for certain, and it is that we can throw out all previous charts and models for what we thought bitcoin would be doing. The world has changed, and bitcoin has reacted to that as well. We are in uncharted territory, and anything could happen.
Before we talk about where prices could possibly be moving towards the end of the year, we need to know our current situation and what brought us here. Bitcoin is currently sitting at $40,000. As a long-term bitcoin holder, that is a price that I'm very ecstatic about. But, that is not the price that we all thought we would be currently sitting at, with the predictions that we were making this time last year. Predictions of over $200k, $300k, and even $400k were all being given out regular. But as you know, we didn't reach those numbers, and instead peaked out at $69k. There were many reasons for this.
As I've talked about countless times before, last year could be considered the year of FUD attacks against bitcoin. It was the most that bitcoin has ever had to contend with. Just to name a few of the FUD issues off the top of my head that were thrown towards bitcoin were the Elon Musk and Tesla selling bitcoin from their balance sheet and eventually removing bitcoin as a payment method for Tesla products. Then came the bitcoin ban in China, and also the mining ban as well. This would cause the mining hash to drop by 50%. All throughout this, bitcoin had to deal with financial market panic each time that a new strain of covid developed. Each time the FUD attack would bring the price of bitcoin down sharply, but it would get back up each and every time. Only to find a new FUD issue thrown towards it. This would be a constant repeating issue. There was FUD in the US infrastructure bill, inflation fears, funds being seized, and also the whole Russia-Ukraine war. All things that brought the price of bitcoin down and put a halt on the bull market. To be honest, with bitcoin's price remaining at $40k even after having to deal with all of those issues, is a very bullish thing.
If this was a normal 4 year bitcoin bull cycle; we would have seen parabolic price movement at the end of last year, that all led up to a blow-off-the top type of movement. We should have already seen the peak and moving down into the bear market. After that type of movement, there would have been a general consensus that the bull cycle had come to an end, and that the bear market had started. Something that would last for a few years until the next bitcoin halving takes place.
But, we never had that parabolic movement, and we didn't have the blow-off-the top type of movement. And it is heavily debated whether we are in a bull or bear market. The market has changed. Do we go up, or do we go down from here?
To put it simply, if the world cooperates, we'll go up, and if it doesn't we will go down. I'm as bullish of a person that you will ever come around, but I am also realistic as well. There is a lot happening in the world right now, and things could get scary for all financial markets.
The world was ravaged by covid and it gave a big hit to supply chains all over the world. This along with unprecedented money printing has caused inflation to hit record highs, that haven't been seen for several decades. It is expected that we might be heading into a recession that could be very painful for many people. During those times, cash is king and people will sell whatever they can to get their hands on it. It turns out that bitcoin is one of the most liquid assets that you can own, which also makes it one of the first assets that people decide to sell. As you can expect; if a great recession or depression does take place, that would not be good for bitcoin or any other asset. That would cause the price of bitcoin to either drop or stay in this range for an extended period of time.
Next the Russia and Ukraine war. In February bitcoin was finally marching up to $45k and seemingly aiming towards new all-time highs when the invasion took place. And that put a halt on everything. If the war continues to linger on for quite a while, or even worse, escalate further. That would have a negative impact on the price of bitcoin. Not only that, but Ukraine and Russia is the world's heartland, where a huge percentage of the world's grains are grown. If the war continues on, this could cause a food supply shock that would send a different type of panic into the markets.
Those two situations above could end in many different ways and no one really knows what will happen. But if the world does cooperate, and an even worse disaster is prevented. If the above situations would improve, that would be a very bullish thing for the price of bitcoin. That would be a development that would cause prices to soar quickly. But, if they go the other way, it could have the reverse effect as well.
Beyond those two macro events taking place, bitcoin is sorely in the need of a new large bullish event taking place in the market. Something that would send the price soaring upwards. While last year, announcements of Michael Saylor and Microstrategy buying more bitcoin for their balance sheet would have been enough for the price to get a boost. That is no longer the case. The market no longer reacts heavily to that news. What could be the next thing that could be that bullish catalyst for bitcoin?
Do Kwon and Luna are not yet finished buying bitcoin to back up their stablecoin, UST. They have pledged to buy $10 billion worth of bitcoin and up until this point have bought just under $2 billion. The key difference between Do Kwon buying bitcoin and Microstrategy buying bitcoin is that Kwon makes his purchases via spot. Which means that it can and does affect the price of bitcoin. Microstrategy makes their purchases over-the-counter, which doesn't affect the price in the short-term, but will in the long-term.
Many people were disappointed with the Bitcoin 2022 Conference, and the reason for that is there wasn't the mind-bending announcement that we were all hoping for. Many had their sights set on many large countries officially making bitcoin legal tender. Instead, we got two small jurisdictions that were adopting bitcoin, but not any countries. If we were to see another country, and even better, a larger country make bitcoin legal tender that would be a huge catalyst for the market. I will say this, I do think many people are underestimating the announcement that Jack Mallers did announce at the conference. Lightning being able to be used at such a large amount of retailers is huge.
Company and retailer adoption. As you can see the trend, we are in the need of some type of big announcement. If a company that is respected like Tesla, were to put bitcoin on its balance sheet, the bull market would be back on. Companies such as Apple, Amazon, Google, Meta and the list goes on. But they don't even need to put it on their balance sheet to have that catalyst effect. They can just begin accepting it for payments. If Apple or Amazon were to be being accepting bitcoin, this would not only be a major step in the adoption of bitcoin, but the perception of it as well.
Next is the infamous US Bitcoin spot ETF. While there are already countless spot ETF's in other countries around the world, there is no denying that the US is still the major financial player in the world. Also, they often set the trend or model for other countries to follow. It is widely expected that if a spot ETF were to be introduced, that bitcoin's price would soon double in the days or weeks that follow.
There are many possible catalysts that I didn't mention, but if just one of the things above would happen, that is all we would need for the price of bitcoin to surge again. I would also argue that if there is a nice amount of quiet time in the world, without any new FUD coming towards bitcoin, that also would give it the time it needs to march back up again. If we were to see the bull run continued, I think we could easily see a $100k+ bitcoin this year. But, there is no guarantee that any of them will happen. And our fate heavily depends on those first two FUD issues that the world is having to deal with. If they worsen and there are no catalysts that come, we may just need to wait until the next bitcoin halving until things begin to pick up again. With that said, long-term, bitcoin will someday being going to $1 million plus. The only question is if you have a long-enough time frame. I firmly believe that the prices we see today is a great accumulating zone, that you will wish you had bought even more as time goes on. The world is an unpredictable place, and no one knows for sure what will happen. But, I remain bullish.
How about you? What is your bitcoin price prediction for this year?
As always, thank you for reading!