Bitcoin price prediction Will BTC rise above $31,000 in 2022?

Bitcoin price prediction: Will BTC rise above $31,000 in 2022? 

Bitcoin surged to a new all-time high on December 16 2020 as the leading cryptocurrency crossed the $24,000 mark. The BTC price has since pulled back to around $23,000 but many analysts believe that the rally is far from over. In fact, some experts are predicting that Bitcoin could rise above $31,000 in 2022.

Although Bitcoin has had a bumpy start to the year, analysts believe it will eventually reach $100,000 — and that it will be a matter of when not if.

Bitcoin's price dropped below $28,000 on Thursday, as both traditional financial markets and cryptocurrencies failed to recoup upward momentum after a broad sell-off earlier this month.

Investors are concerned about growing inflation, geopolitical tensions, and the possibility of the US Federal Reserve tightening monetary policy. In recent months, the crypto market has been increasingly linked to the stock market, making it even more dependent on global economic variables.

With no end in sight, experts predict that the conflict, inflation, and shifting monetary policy in the United States will create even more volatility in the coming weeks and months.

In a market analysis study, Edward Moya, senior market analyst at foreign-exchange brokerage Oanda, stated, "Bitcoin continues to follow the trail set by equities as confidence in cryptos diminishes. "Bitcoin is struggling to break through the $30,000 barrier, which will be a worrying indicator if equities remain stable."

Over the last four months, Bitcoin has only been above $45,000 for a few brief periods, and it hasn't been above $50,000 since December 25, 2021. Despite this, Bitcoin has remained above its 6-month low of $34,000, which it reached in late January. Despite the ups and downs, Bitcoin's current price is still a long way from its all-time high of $68,000, which it reached in November. Despite the current price drop, Bitcoin is still worth more than twice as much as it was just a few years ago. These types of ups and downs are nothing new for Bitcoin.

Despite the volatility and recent price drop, many analysts believe Bitcoin will eventually cross the $100,000 milestone, however, there are differing viewpoints on when that will happen. According to a recent poll by Deutsche Bank, approximately a quarter of Bitcoin investors anticipate the price of the cryptocurrency would exceed $110,000 in five years.

The volatility is nothing new, and it's one of the reasons why experts advise new crypto investors to be cautious when committing a portion of their portfolio to cryptocurrency. Bitcoin has risen in value as steadily as any other cryptocurrency on the market over the years. It's only natural for Bitcoin investors to wonder how high the currency can rise.

Unfortunately, the price of Bitcoin is exceedingly difficult to forecast, and it is considerably more vulnerable to market forces than other asset classes. Nonetheless, we decided to poll some experts for their best ideas. Here's what they had to say:

» Learn more: Read our explainer on What is the difference between Bitcoin and Ethereum?

Bitcoin Price Forecasts

Coming off its all-time high in November, a $100,000 Bitcoin price was easy to forecast late last year. With Bitcoin's steep decline since then, the prediction game has become much more difficult.

The most ardent crypto doubters anticipate that Bitcoin will crash to $10,000 by 2022, but a middle ground could be that Bitcoin can still reach $100,000, as many experts projected late last year — albeit on a slower schedule.

Back in November 2021, Kate Waltman, a New York-based certified public accountant who specialized in crypto, told us, "The most educated instructors in the sector are expecting $100,000 Bitcoin in Q1 2022 or sooner."

But, as major organizations like Nike and other big brands explore methods to monetize their products in the digital metaverse, bullish analysts are re-evaluating the crypto industry as a whole. The popularity of altcoins is growing as a result of the emergence of metaverse games, worlds, products, and experiences, which has shifted investor perceptions of Bitcoin (known as the original crypto).

Many experts are hesitant to estimate a specific amount or a certain date, instead of pointing to the trend of Bitcoin's value increasing over time. Last October, Jurrien Timmer, director of global macro at Fidelity Investments, forecasted a "very sustainable" growth in Bitcoin's long-term value, driven by organic market activity, with the $100,000 milestone insight.

Kiana Danial, founder of Invest Diva and author of "Cryptocurrency Investing For Dummies," says, "What I foresee from Bitcoin is volatility [in the] short-term and growth [in the] long-term."

Here are some additional forecasts for the coming year, ranked from low to high:

» Learn more: Read our explainer on How does bitcoin work?

Balina, Ian

• Bitcoin investor and founder of Token Metrics, crypto research and media firm
• Prediction: Bitcoin could reach $100,000-$150,000 in the near future, but the timing is uncertain.
• Why? Although Bitcoin is in a bearish sentiment cycle, the entire crypto market and other crypto asset classes are not. Although Bitcoin was the first cryptocurrency, others have recently overtaken it in terms of creativity in what experts refer to as "Web 3" - the new internet-based on the blockchain. The emergence of new cryptocurrencies and the hype around the metaverse will continue to boost crypto demand, and Bitcoin will finally recover.

Matthew Hyland

• From the perspective of a technical analyst and a blockchain data analyst
• Bitcoin is expected to hit $100,000 in 2022.
• Why: The price of Bitcoin in January 2022 is nearly the same as it was in January 2021, but altcoins are seeing a surge in demand. According to Hyland, there is also a continuous trend of Bitcoin supply leaving large exchanges (probably to be stored in offline crypto wallets). He also recently stated that a drop below $40,000 might trigger a "free plunge" into a bear market for Bitcoin.

Robert Breedlove

• Point of View: Founder and CEO of Parallax Digital, a digital asset marketing and consulting organization.
• Predictions: $307,000 by October 2021 (which has already passed), and $12.5 million by 2031
• Why: After COVID-19, inflationary pressures will increase interest in cryptocurrency, increasing Bitcoin's value higher than previous forecasts, according to Breedlove, who remarked in an interview earlier this year. Breedlove, who is known among crypto enthusiasts as more of a philosopher, frequently speaks about the broader social implications of crypto as a form of more transparent, decentralized currency — but his price predictions haven't always been accurate.

Big financial firms have also made projections, with JPMorgan projecting a long-term high of $146,000 and Bloomberg estimating it may exceed $400,000 if the currency rises at prior rates.

Maintain your emphasis on your total portfolio, which includes passive index funds, emergency savings, and your retirement account, even if Bitcoin breaks $100,000.

What Factors Affect Bitcoin's Price

Supply and demand, public mood, the news cycle, market events, scarcity, and other economic factors all influence the price of cryptocurrencies, just as they do any other currency or investment.

Bitcoin's value is influenced by more factors than the ordinary currency or securities because it is a new and emerging asset. Here are a few examples:

» Learn more: Read our explainer on What is the difference between Bitcoin and alternative digital currencies?

Scarcity

There are only 18 to 19 million Bitcoins in circulation right now, and production will cease at 21 million. This inherent scarcity, according to industry insiders, is a key element of cryptocurrency's attraction.

"There's a set supply but growing demand," says Alexis Johnson, president of Light Node Media, a blockchain public relations and events firm.

Other analysts argue that Bitcoin is valuable because people value it. "The psychological factor is basically why everyone is buying," says Nelson Merchan, co-founder of Johnson's Light Node Media. This makes determining if Bitcoin and other cryptocurrencies are authentic challengings for the typical customer. The supply and demand principle only works when people want something scarce - even if it didn't exist before.

When it comes to Bitcoin's origins, Merchan argues, "it almost seems like a swindle." Since starting to invest in crypto in 2017, he claims to have seen his crypto holdings reach millions of dollars at times, but he's also seen them vanish in an instant.

"If it's not in cash, you don't truly have that money, Merchan argues, "because, in crypto, anything can plummet substantially overnight" To protect your money from volatility, experienced financial advisers recommend dedicating only 1% to 5% of your portfolio to cryptocurrency.

Mainstream Adoption

According to Waltman, one of the key causes fueling Bitcoin's price surge is the rate at which new users are buying and investigating cryptocurrencies.

She claims that "crypto technology is being accepted at a higher rate than humanity first adopted internet technology." The compounding acceleration of new adoption might continue to push Bitcoin's value higher and higher, assuming it continues.

According to data from the digital asset management business CoinShares, bitcoin use has been expanding at a rate of 113 percent per year. (People, on the other hand, are adopting the internet at a slower rate of 63 percent.) The analysis claims that if people warm up to Bitcoin at the same rate as they did to the internet in its early days (or faster), there would be 1 billion users by 2024 and 4 billion users by 2030.

According to CoinDesk, the number of new wallets globally climbed 45 percent from January 2020 to January 2021, reaching an estimated 66 million. Coinbase, a popular cryptocurrency exchange, claims to have over 73 million customers globally, while Gemini just released its "State of U.S. Crypto Report," which claimed that 21.2 million Americans possess bitcoin of some type.

Regulation

In recent months, federal officials have made it obvious that they are paying attention to cryptocurrency. One important factor for Bitcoin's trailing price, according to industry insiders, is what crypto insiders regard as "hawkish" federal regulation. Seth Ginns, a managing partner at CoinFund, said in a recent CoinDesk First Mover interview that "the Fed moved to a hawkish position [on crypto regulation] just as Omicron started to tick up in the US," which could have raised doubt in crypto as a viable asset, leading to January's bearish sentiments.

Regulation of cryptocurrency raises a slew of unsolved questions. President Joe Biden recently signed an infrastructure law mandating all cryptocurrency exchanges to report their transactions to the Internal Revenue Service. Similarly, Treasury Secretary Janet Yellen recently stated that stablecoins — a sort of cryptocurrency tied to the value of the dollar — should be regulated by the government.

According to a white paper issued by Flourish, a fintech platform for investment advisors, the discourse on regulatory policies is "patchy." Any new legislation can have an impact on the value of a relatively young asset class like cryptocurrencies.

When China banned cryptocurrency in September 2021, for example, investors watched Bitcoin's price plummet, though it has since rebounded and resumed its normal volatility. Despite the fact that Bitcoin has been around for over a decade, the Securities and Exchange Commission is taking a case-by-case approach to widespread crypto acceptance, which experts refer to as its "crawl, walk, run" policy.

Mining Cycles

Finally, a cycle known as halving has a significant impact on Bitcoin's price. Although it is complex and algorithmic in nature, halving is a stage in the Bitcoin mining process that reduces the payout for mining Bitcoin transactions in half.

The rate at which new coins enter circulation is influenced by halving, which might affect the value of current Bitcoin holdings. In the past, halvings have been linked to boom and bust cycles. Some specialists claim to be able to forecast these cycles to the day after a halving occurs.

» Learn more: Read our explainer on what is blockchain and how does it work?

What Every Investor Should Know About Bitcoin Price Forecasts

Financial planners and other specialists warn against letting Bitcoin's price volatility drive you to make emotional decisions, as they do with any investment. Investors who make monthly contributions to passive index funds and ETFs outperform the market over time, according to studies, thanks to a practice known as dollar-cost averaging.

That's why experts advise investing no more than 5% of your whole portfolio in cryptocurrencies, and never investing at the price of emergency savings or paying off high-interest debt. People who invest in diversified investments like low-cost index funds, with crypto making up a modest part of their portfolio, are more likely to build long-term wealth and save for retirement.

Even with crypto, experts recommend taking a set-it-and-forget-it attitude. "Passive investing is a really valid technique to reach financial goals," says Sarah Catherine Gutierrez, a certified financial adviser in Arkansas.

Because most people are unfamiliar with cryptocurrency, it's fine to wait and observe how things develop before putting your money on the line. We only have around ten years of data to base crypto price projections on, and the price of Bitcoin, while potentially rising in the long run, is the extremely volatile day today.

Volatility makes it difficult to understand the "what" and "why" of your cryptocurrency strategy. Before you invest in Bitcoin or any other alternative asset, consider what you hope to gain and why you want to participate in such a turbulent market. This will assist you in remaining focused.

"I don't think people understand how to evaluate [Bitcoin] across the board," Gutierrez says. "You need to know your anticipation of what value you'll obtain from what you're buying while you're buying it."

According to Gutierrez, financial planners do not have a bias against bitcoin, especially if a client indicates an interest in learning more about it. However, you should consider whether you require cryptocurrency as part of your strategy. According to Gutierrez, the answer is no in the vast majority of cases.

"Our opinion is that you don't need Bitcoin to achieve your goals," she says, adding that the average consumer should prefer straightforward, easy-to-understand investment methods. This can help you stay on track with your primary financial goals and put you in a better long-term position for a happy retirement.

Don't forget to read: Will crypto rise again in 2022 after a crash?