Bitcoin Forecast 2022: Technical and Fundamental Outlook

Bitcoin Prediction 2022

Below is our Bitcoin forecast for 2022. We also provide the possible fundamental drive for the recent selling.

The leading cryptocurrencies including bitcoin were heavily sold into 2022. Some analysts blame the Fed’s intentions to tighten its loose monetary policy as the trigger for bitcoin’s weakness.

Due to the rising inflationary pressures the Fed may act, which in turn lead to corrective weakness across the leading US indices. The SP500 and Nasdaq100 are trading lower at the time of this writing.

The so-called correlation between bitcoin and stock markets may be accepted by some, we at ddmarkets have different views. Decentralized Finance (DeFi) is unrelated to stocks, crude oil and even gold for that matter.

To further support our case we crossed BTCUSD 15min chart with the SP500:

BTCUSD 15min Chart

Click to enlarge:

SP500 15min Chart

Click to enlarge:

Despite SP500 recent recovery off the lows, BTCUSD failed to track the recovery. The firm bullish candlestick in BTCUSD is not reflected in SP500. The correlation between bitcoin and SP500 is fairly poor at the time of this writing.

It can be argued that the correlation is only 60% (for example). Even then, attributing BTC selling due to the selloff in global equities has no concrete evidence. It is a fairly feeble speculation.

Crossing BTCUSD with the SP500 at an intraday level may be insufficient to some. As opposes to traditional correlations such as AUD and the leading indices, we are unable to determine similar correlations between BTC and the indices.

Why is Bitcoin Dropping?

First, cryptocurrencies are still new when compared to traditional instruments. The immediate opinions may be that cryptocurrencies are risky assets. Anyone that considers trading bitcoin must do so with caution.

We however have an alternative explanation as to why Bitcoin and Ethereum are dropping in value. Non-Fungible Tokens (NFT) are on the rise. Many artists are listing their work (referred to as art NFT) in NFT marketplaces.

There are various NFT projects as such the Bored Apes Yacht Club or Cryptopunks that gained a lot of attraction in 2021 into 2022. Dozens of NFT projects are released every week at the time of this writing.

NFT artists that receive payments for their artwork may liquidate their crypto holdings into fiat money. As opposed to crypto investors that hold onto their currencies, NFT artists are not the same.

As NFT creators want to see their money in ‘real currencies,’ the amount of sell orders may have increased as a result. The selling pressure has intensified, which may reason the hefty selling that is taking place in the market.

In third quarter of 2021 the trading volumes of NFTs exceeded $10 billion. Approximately 96% of NFTs are sold and bought over Ethereum. However, there is a high correlation between ETH and BTC. We have yet to see moderate gains in BTC while heavy selling is taking place in ETH and vice versa.

The latest news suggest approximately $15 million in the form of Ethereum were stolen from crypto.com. Below is the suspected address behind the theft:

ETH address linked to a possible hack

Criminal activity has increased in tandem with the value of cryptocurrencies. Hackers are more than likely liquidate the stolen crypto in various ways. It is another factor that may contribute to the recent selling of Bitcoin.

MasterCard Coinbase Partnership

What may ease the selling pressure is credit card payments for NFTs. Coinbase has recently signed a deal with MasterCard that allows buying NFTs directly with a credit card.

If the NFT seller is receives the payment in a fiat currency, with time it may decrease the sell orders by NFT artists that wish to convert their crypto payment to fiat currencies asap.

Although Coinbase NFT marketplace is yet to be online, a waiting list is available. Some NFT artists may gradually shift towards Coinbase unless other platforms will close a deal with credit card companies such as Visa and AMEX.

Bitcoin Technical Prediction

When the above materializes some pressure will be taken off the top cryptocurrencies. Until it happens we will be using technical analysis to predict the trend for Bitcoin.

BTCUSD Weekly Chart

Click on the chart to enlarge:

Bitcoin weekly chart painted a classic top Head-And-Shoulders (H&S) reversal pattern. Many analysts are basing their forecast for Bitcoin based on the reversal pattern.

Some may suggest it was already affirmed as the neckline (lower line) can be placed higher. The 100% objective of the reversal pattern is around $31,000.

However, based on our experience in price action strategies and reversal pattern, the H&S does does not classify as a firm sell signal. While $31,000 may be reached, the pattern itself acts as a warning signal for investors that are already holding long positions.

BTCUSD Monthly Chart

Click on the chart to enlarge:

The monthly chart suggests a stronger case for a moderate recovery. This is still far from being a buy signal until the monthly close (the end of the month). If at the end of the month the price closes above $40,120 it may trigger corrective gains towards $61,000.

When using both the weekly and monthly charts, the monthly close may provide the firmest indication as to where Bitcoin may be heading.

Click on the chart to enlarge:

https://assets.ddmarkets.com/2022/01/btcusd-4hr-chart-19-january-2022-ddmarkets.png

Shorter time frames (4hr chart) may provide an entry into the cryptocurrency. A 4hr close above $44,100 may pave the way towards $46,500. If BTUSD is able to overcome $46,500 a stronger recovery may take place, targeting $52,000.

Bitcoin Forecast Conclusion

Within the next 3 – 4 months Bitcoin’s trend may already be painted. We exercised fundamental analysis along with technical analysis for our projections.

If the Ethereum 2.0 update is implemented (summer 2022) the volatility may be rekindled across numerous tokens that sit on the Ethereum blockchain.

Predicting the markets is challenging, we used the best tools at our disposal. Subscribe to our newsletter for free to receive updates on newly released articles and join one of our membership plans.

Last Updated on January 19, 2022