Spoiler alert: the main forecasts are mildly pessimistic. The market is “frozen,” waiting for the development of current geopolitical conflicts and further measures of the Federal Reserve to control inflation in the United States.
CoinsPaid Media prepared an analytical material concerning the ongoing situation in the cryptocurrency market, its background and predictions for the near future. Crypto experts shared their comments and thoughts on the matter.
Potential to Reach Local Lows
“Since the beginning of 2022, the crypto market has been pretty gloomy and driven a lot by multiple macro factors such as the war in Ukraine and the hawkish shift in the monetary policy from the major Central Banks in an attempt to tame the inflation growth to go out of control. As a result, BTC, the king of crypto, has been trading in a choppy fashion and has been mostly range bound between roughly $48,000 and its yearly low of $32,898 posted on January 24,” CoinsPaid trader Vince Pellizzari states the situation.
He believes that BTC has been pretty correlated with equity markets recently, and when asset classes move lower in a correlated manner, it is a sign of a bearish market. From a fundamental standpoint, as long as inflation remains high, the Fed will keep fighting it with more rate hikes. So it’s not the high inflation that drives the BTC market, but rather the stance of monetary policy, which is for now rather hawkish, and this means pressure on the broader markets.
“Speaking about levels, from a technical perspective to the upside, BTC would have to clear $45,000 in order for me to start getting slightly bullish and then $50,000 before even thinking about the possibility for it to post a new all-time high during 2022. If the economy keeps putting pressure on the market, we could easily see BTC reach the low thirties by the end of the month, and the possibility for it to post a new yearly low is not to be excluded,” Vince concludes.
Long-Term Investments Are Always Relevant
Sergei Khitrov, Founder and Manager of Listing.Help, notes that all recent growth cycles of the crypto market have been extremely short-lived, and it is challenging to make short-term predictions given the current situation. The expert said that the maximum values of the Fear and Greed Index were only in the neutral zone, followed by significant sales and price declines.
Many analysts predict the onset of the crypto winter in 2022, so market players act carefully. Among other things, Khitrov noted BTC’s increasing correlation with the stock market, so if the stock market falls, the cryptocurrency market is also very likely to go down.
“As of today, I would consider long-term investments in Bitcoin only,” Sergei states.
No Reason for Optimism
“We can notice that BTC quotes repeat the dynamics of American stocks, whose drop also began at the end of last fall. The thing is that they are influenced by similar factors: the reduction of Fed stimulus, which let the whole range of risky assets grow in 2020 and 2021, and increased geopolitical tensions, promoting the capital outflow to safe havens. Even the euro, like other currencies in developed countries, is unable to resist the dollar’s growing strength. It isn’t easy to find reasons to be optimistic in such an environment. Most likely, BTC will return to local lows near $31,000. In the absence of good reasons for growth, the fall can continue to $25,000-27,000,” Senior Analyst at Esperio, Anton Bykov, shares his discouraging forecast.
“The other cryptocurrencies will follow Bitcoin as the biggest digital asset. Of course, we may see a divergence in some cases, but it will be closed later. Recent examples include the WAVES rally, which ended in a V-shaped reversal, or LUNA’s uptrend, the price of which has been going down for the last two weeks. Certainly, there will be notable cases like STEPN. However, they are rather exceptions, and I doubt they will have enough strength to keep growing for a long time. In such circumstances, it’s better to take a wait-and-see attitude and gently buy coins of promising projects with working technology as their value decreases,” says Anton.
Gradual Decline and Uncertainty
Dmitry Noskov, the expert at the StormGain crypto exchange, also states a new round of BTC fall. He thinks that the situation is influenced by the US Federal Reserve’s rate hike and the regulator’s plans to raise the rate by 0.2pp at each meeting to control inflation. The expert points out crisis phenomena in the global financial system and predicts growth of investors’ attention to cryptocurrencies where money will “flow” from traditional assets.
“Until the end of April, Bitcoin is unlikely to change its positions greatly — most likely, it will continue to move in the $39,000-42,000 range,” summarizes Dmitry.
“The storm and uncertainty in the crypto market are noted by Oleg Fakeev, Founder of the Telegram channel “Kit Investments.” According to him, investors fear the following factors:
- The US Federal Reserve’s rate hike.
- The military operation in Ukraine.
- Inflation statistics.
- Unrest in Canada.
- The tension between China and Taiwan.
“The crypto market, like the stock market, shows a gradual decline. The anxiety level has been rising, especially in the last week. Will there be an increase before the end of April? It’s unlikely, since the Fed meeting is scheduled for early May. BTC will probably range between $40,000 and $43,000. It’s a “price-fixing” of all the events we expect in the near future. After rates rise, growth is quite possible. The second variant, less probable, is a bounce from $40,000, an important psychological support zone, and the growth up to $50,000-52,000. However, there should be some unexpected positive events in the market for this purpose. So the first variant is more likely, in which we will flat out until the Fed meeting,” says Oleg.
“It’s difficult to make any predictions because the situation is very uncertain, as there are always two scenarios: either up or down,” Ivan Kibalchich, Yosu CEO, succinctly characterized the current market situation.