Vil bitcoin nå et lavmål i to år?

High volatility is still inherent in Bitcoin

Amid the ongoing crypto winter, Bitcoin has recently shown a short-term rally and grew from $16,900 to $18,300 on December 12-14, updating the monthly maximum. This event caused lots of talks about the main crypto asset and the community was discussing how quickly BTC will do a complete reversal and begin growing.

The majority of traders agree with the opinion that Bitcoin will continue falling in the near month or longer. We could see the downtrend that reminds us about the main feature of the flagship cryptocurrency — high volatility.

Bitcoin Volatility Index in 2022

Some unique characters stated in November-October that BTC could reach $100,000 by the end of the year, however, no one initially treated their words seriously.

After BTC moved away from the mark of $18,300 and began falling, everyone remembered that the market was still going down and people asked a question: “When will the bear cycle be over?”

How does the exchange crash affect the crypto market?

Other events that have been confusing crypto enthusiasts for months make the situation with the downward trend even more complicated. For example, the crash of the American stock exchange FTX doomed the digital currency market to continue the crypto winter. The reason for it was the poor financial state of many other platforms, due to which they had to shut down.

Consequently, when the whole exchanges fall, assets that have been there also start losing value, including their tokens. The FTT case is a nice example. After FTX was unable to pay off money to clients due to low liquidity, Binance understood what was going on and dropped the FTT positions, collapsing the token.

This year, the price of the FTX token was more than $75, the price before the crash of the exchange was equal to $22 but it dropped by 95% after massive sales, and one token of the FTX stock exchange equals $1,05 at the moment of writing the material and is very close to falling below this threshold. Recall that FTT was estimated at $1.35 at the very beginning.

FTT quotes for the last 3 months

2022 is a difficult year for the digital currency industry

But FTX is not the only case that we could see in 2022. Yes, it is pretty big but not the only one. Previously, we witnessed the collapse of such big projects as Terra (LUNA), Celsius Network, Three Arrows Capital, Voyager, and others. The case of FTX is special because many cryptocurrency platforms kept their assets in this exchange and they are already at the stage of financial insolvency and are close to going bankrupt. The company Digital Currency Group is the first to come to mind.

The situation with Digital Currency Group is harmful not just for them but their subsidiary companies owned by DCC. Experts were previously talking about a big chance of the liquidation of the companies owned by Digital Currency Group as an opportunity to save DCC. The last one also tried to attract big investments to stay afloat, however, help has not arrived.

Grayscale Investments and Grayscale Bitcoin Investment Trust might become the first dead weight to be dropped by the top management of Digital Currency Group. Previously, there was news about a significant shortage of their positions, which is DCC’s attempt to find money to pay for its debts. However, it seems that the liquidation of the subsidiary companies of DCC is inevitable.

Besides native tokens that lose activity, assets of the platform clients are also sold, which makes a negative impact on the price of the assets that were held by traders and investors. However, many of them will switch to hardware wallets now, which will reduce the risk of repeating such cases in the future.

However, Bitcoin and the crypto market are still in the downtrend and will be moving in this direction for some time, probably, a few months, after which, having found the bottom point, the flagship crypto asset will push off from it and start growing.

What do analysts say about the future of Bitcoin?

Assumptions are assumptions, but in reality, everything can be more unpredictable, as always in matters related to the currency and cryptocurrency markets. Where will the BTC price go shortly? Many experts related to the cryptocurrency world and the financial market try to answer this question.

For example, Edward Moya, a senior market analyst at Oanda, who has been working as a forex broker since 1996 thinks that Bitcoin may renew its lows soon, but this may require the closure of other cryptocurrency exchanges, as happened recently with FTX. And it is very likely to happen:

We will be talking a lot about FTX for months to come but what will drive the cryptos is if Binance, Coinbase, Lbank, or Consbit have any liquidity crunches. A lot of bad news has been priced in so it might take another downfall of a major crypto company or a de-risking movement on Wall Street to take bitcoin below its recent low.

Other experts from the cryptocurrency markets have also shared their opinions. For example, a financial analyst at BitRiver, Vladislav Antonov noticed that despite a good start to the week, BTC is again moving to what short and middle-term investors do not want:

For Bitcoin, the week started great, but it ends on a minor note. In the first half of the week, the BTC/USDt pair rose to $18,300 in anticipation of the results of the US Federal Reserve meeting. The appetite for risky assets kicked up after the publication of the inflation report for November. Inflation in the US slowed down and reinforced expectations of a slowdown in rate hikes at the Fed's December meeting.

According to Antonov, the fall of the cryptocurrency quotes was influenced by the statement of the chairman of the US Federal Reserve, Jerome Powell, and investors are now afraid of investing money in the flagship cryptocurrency, withdrawing money from exchanges:

Powell scared markets, so stock indexes fell again. Cryptocurrencies inflated stronger amid the news by Bloomberg that the audit firm Mazars Group stopped working with all clients from the crypto industry after checking the Binance Bitcoin reserves. Despite Binance revealing information about its cryptocurrency reserves after the collapse of FTX, investors continue withdrawing money from the exchange on fear of accusations. The exchange is suspected of connections with the Chinese Communist Party, money laundering, and intentionally contributing to the collapse of the FTX exchange.

He also reminded us that the owner of Binance, Changpeng Zhao tried to reassure customers by inspecting the reserve funds.

However, the report made by Zhao about the inspection works badly on the reassurance of investors:

Buyers were not active with the New Year’s growth. Zhao tried to offset the beat mood and stop the massive withdrawal of money and sales but investors continued selling cryptocurrencies. Since sellers beat the trend line, the risk of falling to $15,500 rose. But the support might not work out this time.

Artem Deev, a head of the analytical department of the AMarkets broke, also shared his thoughts. Artem said that the short-term growth of Bitcoin was due to the inflation report in the USA that was below the expected one:

To understand what kind of movement will happen next, you need to understand the reasons for this dynamic. Bitcoin rose on Wednesday after the release of inflation data in the United States: it turned out to be lower than the forecast - 7.1% versus 7.3%. This turned out to be positive for the markets, the indexes went up, as many perceived such a decrease in inflation as a reason to think that the FRS will soften its rhetoric on the rate. But this did not happen: on Wednesday evening, the FRS raised the rate by the expected 0.5% and indicated that it intends to reach the rate level of 5-5.25% next year. After that, Bitcoin went down and so far the movement has not stopped.

So we can conclude again that the crypto market is closely connected to the stock one and the news that previously did not influence the digital asset industry, has begun influencing it.

He also noticed that many investors are in a state of fear and withdraw their assets from exchanges even if it is the biggest cryptocurrency platform:

Now, even with Binance, investors are actively withdrawing funds, and in record volumes. In the United States, they intend to extremely strictly regulate the crypto market and the operations of citizens. The prospects of a worldwide recession are growing, which will not add money to the financial markets.

He attributed this to the upcoming fall of the flagship cryptocurrency and did not exclude that BTC might even reach the mark of $10,000:

So it is worth expecting that Bitcoin will not be growing but even reach its minimum soon. Perhaps, its price will be equal to $10,000 in the first half of 2023 or even the first quarter.

Bitcoin cost $10,000 for the last time on July 27, 2020