After a mega bullish rally that took the price to an all-time high of $69,000, Bitcoin is now immersed in a strong pullback that it cannot escape yet in 2022, which makes us wonder if it is really a good idea to invest in this asset.
At the time of this writing, BTC is trading at $42,874, accumulating a loss of 3.10% in the last 24 hours.
Currently, the price is trying to breathe after a quick and sharp drop, which has been creating problems in the entire crypto market.
Is this bad start to the year really worrying? Is it worth investing in Bitcoin in 2022? Let’s find out below.
A scarce asset at a historical moment of excess liquidity
The fact that Bitcoin has a supply limit of 21 million coins is well known. Currently, 18.9 million BTC are in circulation. We are already quite close to the limit, and despite the fact that there are still many years to go before the remaining 2 million are mined, the scarcity is already notable.
The little supply that exists has already caused a strong impact on the price of this asset. At $43,000 that is trading today, it is clear that with the low number of coins that exist, while the demand increases, nothing can happen other than a vertiginous rise in price.
Bitcoin is gaining more and more popularity as a store of value, as inflation, the stock market bubble and the money supply grow.
For much of human history, gold has been the best asset to store value.
But, in this new technological era, BTC could continue to gain more and more ground, thanks to its notable advantages over gold in terms of scarcity, divisibility and mobility.
Just 2022 seems to be the year where we begin to see more clearly, how the abrupt issuance of fiat money begins to cause problems in the global economy.
Inflation in the United States has just shot up to 7%. The US Federal Reserve has already admitted that they must get used to this new trend, and are preparing to raise interest rates.
In a historical moment where the amount of fiat money is extreme, where do you think investors are going to look for shelter? Clearly, scarce assets will gain more and more traction.
What does the graph tell us?
The monthly chart of the price of Bitcoin continues to tell us that it is a good idea to invest in this cryptocurrency in 2022.
The long-term trend is undoubtedly bullish. The continuous higher lows and higher highs remain intact.
Recently, the price made a strong correction towards the 50% Fibonacci. Subsequently, a push started but was hampered by the supply zone left by the previous all-time high.
Now Bitcoin is still in trouble in the short term, due to the lack of determination of the buyers. However, the current scenario is nothing to worry about, and it will only be so if the support at $39,000 is breached.
In a weekly summary by Crypto Quant, we see how the technical oscillators are bearish in the short term.
However, the metrics that track supply/demand are bullish, which heralds a positive future in the medium/long term.
Other quite relevant metrics, such as those that track the behavior of whales, also point to a bullish future.
Weekly #Bitcoin Metrics Overview (2022.01.14)
— CryptoQuant.com (@cryptoquant_com) January 14, 2022
"Will it be a trend reversal or a bull trap?"
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What do the experts think about investing in Bitcoin in 2022?
There will always be bearish and bullish sides. This time is no exception. Some analysts indicate that the bubble in the crypto market has already burst.
Carol Alexander, professor of finance at the University of Sussex, expects the price of Bitcoin to drop to $10,000 in 2022, as she believes that this asset has no fundamental basis and is more of a toy than a vehicle for investment.
Although many expect BTC to be a good hedge against rising inflation, analyst Todd Lowenstein believes that a more aggressive Federal Reserve may affect this forecast.
However, Yuya Hasegawa’s vision is different. Yuya is a digital assets crypto markets analyst for Bitbank, and believes that the biggest risk factor from the FED (quantitative easing) has already been discounted from the market, making it unlikely that the bull run is over.
Another aspect to consider in 2022 to invest in Bitcoin is ETFs and regulations.
First of all, the approval of the BITO ETF marked a milestone for the crypto market, by improving the gateway for institutional investors.
However, some experts believe that this is not enough. This new year we can expect the approval of new similar products.
On the other hand, regulations are necessary, and could perhaps even favor long-term investors, although they could cause momentary volatility and uncertainty.
“Sensible regulation is a win for all,” says Ben Weiss, CEO and co-founder of CoinFlip.
Conclusion
Bitcoin is already mainstream. Everyone knows her, albeit in a very basic way. It is already part of this new society and it is extremely unlikely that it will stop being so.
Now it is a matter of beginning to take its place in this world full of regulatory frameworks.
While this might be scary, it really is something that needs to happen, and in the long run there will be even more upside as investors will be able to enter this market with greater confidence.
With its scarcity, divisibility, fungibility, and other positive characteristics, Bitcoin will undoubtedly continue to gain ground in the global economy as long as it remains awash in fiat money.
