Boom or bust? Is there a way for Bitcoin price to hit $100K in 2022?

There are many Bitcoin (BTC), price predictions on the internet. Some analysts predict that the top crypto will reach $1 million per coin within the next 10 years. Others believe the BTC price will eventually fall to zero.

We don’t need to dwell on the five-year-old predictions, but let’s focus on what Bitcoin might do in six months.

The forecasts are also very different. Antoni Trenchev (founder of Nexo Finance) sees Bitcoin reaching $100,000 by mid-2022.

Carol Alexander, a Sussex University professor, believes that Bitcoin could fall to $10,000 and wipe out any gains it made in 2021.

Bitcoin is trending in the middle between these two extreme far predictions. At press time, the cost of one Bitcoin at Coinbase is around $36,500.

BTC/USD weekly chart. Source: TradingView

Bitcoin’s circulation will grow on average at 6.25 BTC every 10 minutes, until the next halving in 2024. This means that miners will be producing approximately 900 BTC per day. This means that 162,900 BTC will have been created by June 2022.

This would increase the total Bitcoin supply to 19.078 billion BTC. BTC’s total market capitalization will be close to $2 trillion if it is valued at $100,000, an increase of 128.50% over the previous year’s initial valuation of $875 billion.

A drop of $10,000 to Bitcoin would result in the Bitcoin market capitalization falling to more than $190 billion. This is down $685 billion or 78% from the year’s open.

After looking at these staggering predictions, the most important question is whether Bitcoin can move violently towards any of the above targets. BTC’s price has been volatile in the past, so I believe the answer is a big YES.

Bitcoin quarterly returns. Source: Coinglass

It is worth asking whether investors are willing to invest almost a trillion dollars in the Bitcoin market over the next six months. Trenchev thinks they might be because of the “cheap cash” factor.

Sovereign currency devaluation remains a catalyst

Investors will have noticed a recent recovery in the U.S. Dollar’s value.

The “U.S. Dollar index” is a popular economic indicator that measures the strength of the greenback against six currencies. These include the Euro (EUR), Japanese Yuen (JPY), Pound sterling (GBP), Canadian Dollar(CAD), Swedish Krona/SEK) and Swiss Francs (CHF). Last year, the greenback jumped more than 7% to 96.22.

Weekly price chart for the U.S. Dollar Index. Source: TradingView

Not only has the dollar seen a rise in value against fiat currencies but also against commodities, it is worth noting that the greenback has been losing battle after fight.

A recent U.S. Bureau of Labor Statistics report shows that consumers paid 7% more for everyday goods in December 2021 than 12 months ago. The inflation rate in the world’s largest country has reached levels not seen since 1982.

This proves that the dollar is only the weakest boxer in a boxing ring, competing with six of the weakest. The greenback has won rounds against all of them, but it also has been running away from real competition.

Let’s talk about competition and compare it to a rarer asset, gold.

Fiat currencies and Gold since 1900 Source: VOIMA

As you can see, almost all fiat currencies have lost the sheen they once had against gold. Inflation is the big elephant in this room. This benefits investors who have been hoarding precious metals or hard money equivalents to counter the current bearish trend of currencies like the dollar.

There is currently $40 trillion in circulation across the markets. This includes all physical money, as well as money that has been deposited in savings or checking accounts. Investments, derivatives, and cryptocurrencies total more than $1.3 quadrillion.

Yes, there is enough greenbacks in the market for Bitcoin to pump it by another trillion dollars. Its cost per unit will rise to $100,000 over the next six months.

Why isn’t Bitcoin already at $100,000?

It is better to examine Bitcoin’s market performance over the years before even considering that argument.

Chart of BTC/USD market cap for six months, with $100B+ in rallies. Source: TradingView

The six-month chart shows that the Bitcoin market capitalization has never increased by more than $1 trillion in the time frame. In the same way, there hasn’t been one instance where Bitcoin’s market value fell by more than $190billion in six months. This is required in the case of a Bitcoin price drop below $10,000.

Although the Bitcoin market has not seen a dramatic rise or fall, historical data shows that more capital is being attracted to it than it produces. This is why its unit price has risen by more than 14,250% since January 2014.

Now, returning to the “why-it-has-not-happened” argument, there seems to be only one answer: uncertainty. There are many sources of uncertainty, from regulatory problems to concerns that the Bitcoin market might need to correct after rallying for nearly two years.

Investor confidence is being affected by the Fed’s taper tantrum

Bitcoin’s recent drop in value from $69,000 to $34,000 was due to the U.S. Federal Reserve’s announcement to stop its $120 billion per month asset buying program earlier than expected. This will likely be followed by at minimum three interest rate hikes above their current low levels.

Since the March 2020 coronavirus-induced global crash, these loose monetary policies have resulted in an estimated $6.5 trillion in monetary policy. The excess liquidity caused the dollar to lose value while more risky assets like Bitcoin became bullish.

Micheal Howell founder of Crossborder Captial says that excess funds on the market had to be’moved somewhere’

Weekly chart of M2 money supply Source: TradingView

The Fed’s quantitative easing policy is being rescinded to curb inflation. It effectively takes the excess dollars out of the market. As the markets run out of cash, they sell their most profitable investments (stock, real estate, crypto, or watches) to raise money.

The next six months could be a stalemate between those who have cash and those who do not. Many investors could be discouraged from selling assets such as Bitcoin due to inflation caused by the dollar’s devaluation. Crypto markets may have trouble attracting new capital if the Fed cuts off liquidity.

Bitcoin is now available to investors and companies that have excess cash in their Treasurys and are looking to use them into easily liquid assets.

Bitcoin has so far attracted major names such as Square, MicroStrategy and Tesla. It would be a Wall Street giant’s willingness to include Bitcoin in its treasury in order to allow Bitcoin to push towards $100,000.

Waiting for the retail boom

As inflation continues to creep into everyday life, people may consider adopting hard assets to help protect their savings. This could be a boon for Bitcoin market. Grayscale Investment reports that BTC’s rise to $69,000 in 2017 coincided with a record-breaking spike in retail interest.

Related: Ledger CEO says that Bitcoin is being pushed up by retailers

A survey of 1,000 investors was conducted by the U.S. firm and 59% indicated an interest in Bitcoin investing. 55% of respondents said that they have purchased Bitcoin assets between December 2020 & December 2021.

Bitcoin addresses that have a balance of at least 0.01 BTC Source: Glassnode

Here’s what you need to do, boom or bust.

Here’s what would happen if Bitcoin reached $100,000 by June 2022.

The M2 money supply is at an all time high.

Bitcoin could plummet to $10,000 in the meantime if:

To raise money, long-term investors may decide to sell Bitcoin. You should do your research before making any investment or trading decision.