Bitcoin price predictions are polarized: falling to $10,000 or rising to $100,000

2022 has been a tough start for Bitcoin as investors grapple with rising inflation, geopolitical tensions and concerns that the Federal Reserve could tighten monetary policy. In recent months, the cryptocurrency market has increasingly tracked the stock market, making it more intertwined with global economic factors.

Over the past week, BTC has been fluctuating around $30,000, and both traditional financial markets and cryptocurrencies are struggling to regain momentum. Many experts still say it will reach $100,000 - it's more a matter of when than if. But at the same time, some experts say that with no end in sight, multiple factors may continue to drive greater volatility in the coming weeks and months. Against this backdrop, predictions for the direction of cryptocurrencies are becoming increasingly polarized.

Volatility is here to stay

After ups and downs this year, Bitcoin's current price is far from its most recent all-time high in November last year, when it exceeded $68,000. But even with the recent price drop, Bitcoin is still worth more than twice what it was a few years ago. For Bitcoin, such ups and downs are nothing new.

Volatility is nothing new, and it's a big reason why experts say new crypto investors should be very cautious when allocating part of their portfolio to cryptocurrencies. Over the years, Bitcoin has grown in value as steadily as any other cryptocurrency on the market. It's reasonable for Bitcoin investors to be curious about how high it can ultimately go.

Unfortunately, Bitcoin’s price is extremely difficult to predict and is even more susceptible to market factors than more established asset classes, but due to its volatility, people still make predictions about it.

In fact, at the end of last year, when BTC was at its peak, the market was mostly leaning towards predicting a $100,000 Bitcoin price. But the pullback from the latest all-time high in November has made the prediction game trickier as Bitcoin has fallen sharply since then. The most extreme crypto skeptics say Bitcoin will fall to the low $10,000s in 2022, but the bulls may say that the cryptocurrency can still climb to $100,000 as many experts predicted at the end of last year — just on a slower timeline.

Downside risks remain

“Bitcoin has been dragged down along with most risk assets as Wall Street suffered its worst losses in nearly two years. Bitcoin remains a risk-on asset and is vulnerable to further pain if risk-off continues,” Edward Moya, senior market analyst at foreign exchange brokerage Oanda, wrote in a May 19 market analysis memo.

Bank of England Deputy Governor Jon Cunliffe issued a warning to cryptocurrency investors at a Wall Street Journal conference on Tuesday. Cunliffe warned that cryptocurrency investors should expect more difficult times ahead. He explained that as the Federal Reserve and central banks around the world tighten financial conditions, investors will prefer safer assets. In response to a question about whether rising interest rates will add pressure on cryptocurrencies, Cunliffe said: I think as this process continues, as (quantitative tightening) begins in the United States, I think we're going to see a shift to risk assets.

In addition, Raoul Pal, former Goldman Sachs hedge fund manager and CEO of Real Vision, said that a potential decline in the stock market could threaten the price trend of cryptocurrencies in the coming months. Pal said that he is watching the Nasdaq index and said that from a technical analysis perspective, if the key support level fails to hold, the index may continue to fall, and the stock market is at risk of a sharp decline. The current macro situation suggests that a major adjustment is coming, which may drag down digital assets, although it will not cause them to set new lows. He also said that if cryptocurrencies eventually enter a phase of adjustment, he believes that more noise will be generated in the entire market.

Long-term bulls extend their positions

Despite volatility and the recent price plunge, many experts still say Bitcoin is on its way to breaking the $100,000 mark, though opinions vary as to when that will happen. A recent Deutsche Bank study found that about a quarter of Bitcoin investors believe the price will exceed $110,000 within five years.

Another indicator supporting the bulls is the mainstream entry. Big companies such as Nike and other big brands are looking for ways to monetize their products in the digital virtual world. The rise of the metaverse and NFTs is increasing the popularity of altcoins, which has changed investors' views on Bitcoin. Jurrien Timmer, head of global macro at Fidelity Investments, predicted in October last year that investors should expect Bitcoin's long-term value to rise "quite sustainably" driven by organic market movements, and the $100,000 threshold is coming soon.

Bitcoin investor and founder of Token Metrics noted that Bitcoin could go up to $100,000-150,000, but the timeline is unclear. Because Bitcoin is in a bearish sentiment cycle, but the entire crypto market and other crypto asset classes are not. Bitcoin was the first cryptocurrency, but now others have surpassed it in innovation, which experts call "Web 3" — that is, the new Internet built on the blockchain. The launch of new altcoins and the hype about the metaverse will continue to drive demand for cryptocurrencies, so Bitcoin will eventually rebound.

Some large financial institutions have also made their own predictions, with JPMorgan predicting a long-term high of $146,000 and Bloomberg predicting that if the currency climbs at a comparable pace to the past, it could reach $400,000.

Multiple factors affect BTC price

Normal economic factors affect the price of cryptocurrencies, just like any other currency or investment — supply and demand, public sentiment, news cycles, market events, scarcity, etc. We have covered the main factors that affect cryptocurrencies in previous articles.

Trends are generally caused by four main factors: government, international transactions, speculation/expectations, and supply and demand. These areas are all linked together because expected future conditions determine current decisions, and current decisions determine current trends. Finally, changes in supply and demand create trends as market participants compete for the best price. (What are the main factors affecting the market outlook: https://www.jinse.com/blockchain/1510877.html)

So, as with any investment, financial planners and other experts advise not to let Bitcoin's price volatility lead you to make emotional decisions. Studies show that investors who regularly contribute to passive index funds and ETFs perform better over time, thanks to a strategy called dollar-cost averaging. That's why experts recommend not investing more than 5% of your overall portfolio in cryptocurrencies, and never at the expense of emergency savings and paying down high-interest debt. The path to long-term wealth and retirement savings is generally successful for people who have diversified investments, such as low-cost index funds, with cryptocurrencies as only a small part of the equation.