Using correlation with inflation data, our prediction is that Bitcoin could fall as low as $15,000. This assumes that consumer inflation will rise to 9% next month. If the consumer inflation trend were to fall, BTC could stabilize or even rise.
Other publicly available forecasts also range in the range of $13k to $15k. Technical meteorologists predict a range of $17,000 to $20,000.
Some others suggest that BTC reached its annual low on Saturday and will now stabilize or move higher.
Are there any other signs of Bitcoin recovery?
Crude oil prices are falling and have reached a 1-month low. As we explained earlier, crude oil prices started to rise on December 20, 2021. Between December 20, 2021 and today, Brent crude oil has risen by 61% and BTC has fallen by 58%. In many ways, Bitcoin and crude oil prices mirror each other and move in opposite directions.
That said, U.S. inflation rates are only rising. Bitcoin reached its all-time high on November 10, 2021 and began to fall from that day on. On November 10, 2021, the United States reported its latest consumer inflation numbers that showed that U.S. consumer inflation had violated 6%. US inflation numbers continue to remain high
Unless inflation starts to fall and crude oil prices continue to fall, Bitcoin prices are unlikely to stop falling and start recovering. Inflation is likely to fall before crude oil prices as Fed rate hikes run through the financial system.
Will Bitcoin return in 2022?
- On Wednesday, the Fed raised interest rates by 0.75% with the promise of more to come. Inflation is expected to start falling over the next 2-3 months in response to repeated Fed rate hikes (later).
- Bitcoin with its limited offering, wide acceptance and recognition has a great use case for sustaining value. It has some gold properties with limited difficulties of supply mining, while it also has some currency properties in the form of acceptance of payments. So owning and buying the coin would not be a bad investment in the long run
- With a market cap of less than a trillion, Bitcoin makes up for almost nothing in the global investment portfolio. So the opportunity is immense.
When will Bitcoin return?
As outlined above, Bitcoin is likely to start rising on a more consistent basis once inflation is tamed. However, given that the Fed is cutting the liquidity pipe, don’t expect a recovery of the kind seen from March 2020 onwards. This could be slower. The question is when US inflation is expected to fall?
- The OECD expects inflation (17 rich countries) to peak during the summer of 2022 and then fall.
- Kiplinger also says inflation will peak in the summer and then thin out.
We know that crude oil prices are also expected to fall in the 3rd or 4th quarter this year.
So it can be said from the information we have that Bitcoin prices are likely to rise again from September to October of this year.
Under what conditions could these predictions be wrong? Unpredictable turn linked to the Russian invasion of Ukraine, the new geopolitical crisis not seen at the moment, the new problems related to the food supply chain, the unpredictable weather conditions affecting the food supply, the political stalemate or the spectacle in the United States due to the November elections.