The price of Bitcoin has been tumbling following a sell-off at the weekend, dropping by almost 20% over the past week.
But one analyst’s prediction for 2022 suggests that the current bad times could be little more than a blip in the unstoppable rise of the world’s most valuable cryptocurrency.
Mike McGlone, Bloomberg Intelligence senior commodity strategist, has issued a research note in which he claimed the US will "embrace cryptocurrencies in 2022" and suggested that Bitcoin "appears to be on a trajectory for $100,000".
McGlone also predicted a “paused, corrected and refreshed bull market” as well as the arrival of regulations in the US that will bring crypto closer to the mainstream.
The optimism didn’t end there, because he also said the price of Ethereum price could hit $5,000.
At the time of writing, Bitcoin is sitting at $47,206 and Ether is at $3,801.13. At the beginning of November, Bitcoin hit an all-time high of $68,521.
"We expect the U.S. to embrace cryptocurrencies in 2022, with proper regulation and related bullish price implications," McGlone wrote. “The unlimited supply of fiat currency should sustain rising prices, notably in Bitcoin and Ethereum, which have limited supply.
“What might trip up the advancing three musketeers - Bitcoin, Ethereum, and crypto dollars - may be the more profound question for 2022, but we expect wider adoption to prevail and overcome most wobbles, like 2021's near 50% correction.”
McGlone said inflation and a strong jobs market in the US could lead the Federal Reserve to take away the “punch bowl” of its stimulus program, which would “favour” the growth of both Bitcoin and Ether.
“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," he continued.
“Bitcoin will face initial headwinds if the stock market drops, but to the extent that declining equity prices pressure bond yields and incentivize more central-bank liquidity, the crypto may come out a primary beneficiary.”
He went on to say that Bitcoin is "well on its way to becoming a digital store-of-value" like gold, a transition he regards as a “question of time, notably due to the economic basics of increasing demand versus decreasing supply”.
The world’s second most valuable crypto is also going to have a good year, the analyst forecasted.
“Ethereum enters 2022 with rising adoption and declining supply while having withstood a substantial correction this year. The key question is how overextended prices may need to get for a pullback, and how deep into support the No. 2 crypto may dip until it finds responsive buyers.”
The analyst is bullish about stable coins pinned to the dollar, which he sees as “representing a better way to transact, a strengthening ecosystem and an asset class that's here to stay.
“Crypto dollars are the most significant advancing part of the digital-money revolution and the third leg of the crypto stool. Bull markets in the other two -- Bitcoin and Ethereum – look as durable as the advancing market cap of stable coins tracking the dollar,” he wrote.
Several other experts have made even bolder Bitcoin predictions.
In October, Jurrien Timmer, Fidelity Director of Global Macro, made a similarly optimistic forecast, although his own analysis suggests the bulls will have to wait another two years until Bitcoin hits the $100,000 mark.
“I have a supply model and a demand model and the next and last time that those two models intersect is at around $100K in a couple of years,” he said in an interview with CNBC.
In June, the billionaire venture capitalist Tim Draper predicted that Bitcoin would hit $250,000 at the end of 2022.
“I think I’m going to be right on this one,” he said.
Draper has been predicting big things for Bitcoin since 2018 and has formed in making the right bets, after making major investments in companies including Telsa, Skype, and SpaceX.
