Will Bitcoin hit US$100,000 or go even higher in 2022?

Bitcoin (BTC) reached an all-time high of just over US$68,500, in November, showing close to 130% upside since the start of the year.

Just over a month later, the world’s most popular cryptocurrency was trading at a ten-week low, below US$46,000 it was off 32% its high – it leaves fervently speculative crypto traders guessing what comes next.

Before looking at the predictions, let’s remember some of the key features of Bitcoin.

What’s special about Bitcoin?

Right now, there are approximately 18.9mln Bitcoins in circulation and scarcity is built in.

Bitcoin’s issuance rate will be halved every four years until the maximum of 21mln coins has been minted.

Industry experts commonly point to the built-in scarcity of Bitcoin as one of the reasons it is appealing to investors and will continue to grow.

“There’s a fixed supply but increasing demand,” said Alexis Johnson, president of the blockchain and events company, Light Node Media.

Generally, soon after the halving events, BTC prices tend to follow a pattern of rapidly increasing well beyond the previous ATH, correcting and shedding value over a slightly longer period, then oscillating in a window of diminishing volatility, before finally returning to a gradual upside continuation before the next halving, said CoinShares Research.

“Long-term investors resist the urge to sell their coins below acquisition cost during at least one cycle downturn, restricting supply as they hold on to coins until finding profits in the next upswing.

“Their success [means] the same rough sequence of events and the cycle repeats, [so] these factors point to at least some probability that Bitcoin price cycles might continue in a similar fashion as they have in the past,” it added.

Kiana Daniel, founder of Invest Diva and author of ‘Cryptocurrency Investing for Dummies’ reinforced this point: “What I expect from Bitcoin is volatility [in the] short-term and growth [in the] long-term.”

What are analysts forecasting?

“The most knowledgeable educators in the [crypto] space are predicting US$100,000 Bitcoin in Q1 2022 or sooner,” said Kate Waltman, a New York-based certified public accountant who specialises in crypto.

In a tweet on 9 December, Bloomberg intelligence senior commodity strategist Mike McGlone predicted 2022 will have “positive ramifications” for Bitcoin as global markets will face “deflationary forces.”

With Bitcoin’s support level at US$40,000 and its initial resistance of US$70,000 “Bitcoin appears to be on a trajectory for US$100,000 in 2022 [and is] well on its way to becoming a digital store-of-value” like gold, wrote McGlone.

“A primary force to reverse expectations for Federal Reserve tightening in 2022 is a drop in the stock market, which may be a bit of a win-win for Bitcoin,” added McGlone.

Meanwhile, Simon Peters, a crypto analyst at the forex and crypto trading platform eToro, did not provide a specific price prediction but he did reveal his expectations for the general trend that BTC will follow.

“We saw a bull market in 2013, 2017 and we’re seeing it now in 2021.

“However, where we saw parabolic price increases towards the latter end of the 2013 and 2017 bull markets, we haven’t yet seen it this year, which suggests there could be further price increases to come before we reach the ultimate top,” Peters said.

No way to make a target …

Laith Khalaf, head of investment analysis at AJ Bell also believes that Bitcoin is “such a volatile asset that there’s absolutely no way of formulating any price target.”

Khalaf added that stricter regulation, further environmental concerns, and Central Bank’s digital currencies (CBDCs) could be a threat to Bitcoin in 2022, whilst it being widely accepted as a means of exchange or businesses holding more BTC in their portfolios are the positive events that could unfold.

He went on to add that Bitcoin “seems like a speculative bubble,” so he believes the positive outcomes are unlikely to come true unless it quickly begins to act as “a means of exchange or as a digital replacement to Gold.”

However, his “best guess is that over the long term it’s going to be very difficult for crypto to get a foothold in either of those two places.”

AJ Bell investment director Russ Mould shared a similar view to Khalaf, in that, “the fact that you can’t pay your taxes [with Bitcoin], it means it’s never going to be an accepted form of currency.”

He added that “the fact that Central Banks are looking to push their own agenda with CBDCs leads [him] to think that there will be greater regulation going forwards, [although] it would take a wider market accident” to deter people from mining for BTC.

Back to the bulls

Jurrien Trimmer, director of global macroeconomics at Fidelity Investments anticipates a surging run for BTC next year, which he revealed in November.

Investors should expect a “pretty sustainable” rise in Bitcoin’s long-term value driven by organic market movement, with the US$100,000 threshold in near-sight, he said.

“Incentivised by China’s ban and the proliferation of revolutionary technologies such as crypto dollars and non-fungible tokens (NFTs), we expect the US to embrace cryptocurrencies in 2022, with proper regulation and related bullish price implications,” McGlone said in the 2022 crypto outlook.

Some experts were predicting as early as August 2021 that Bitcoin will reach the highly-awaited US$100,000 next year – more than double its August highs.

For example, analysts at Standard Chartered Bank gave their forecast, expecting BTC to reach the $100,000 milestone by “early next year.”

One of the more optimistic predictions is that of Bernardo Schucman, senior vice president of Bitcoin miner CleanSpark’s digital currency division, who said: “I believe in US$250,000 per BTC at the end of 2022 based on the huge number of Bitcoin mining companies that were founded in the US in 2021.”

But, it is important to remember that “investing in cryptoassets, or investments and lending linked to them, generally involves taking very high risks,” The Financial Conduct Authority warned.