With 2022 right around the corner, it looks like many analysts are split right down the middle when discussing what could happen with bitcoin and the cryptocurrency space in the coming year. Will the world’s number one digital currency rise to new heights? Or will it come crashing down dramatically?
How Will Bitcoin Do Next Year?
One figure to warn of a possible crash is Carol Alexander, professor of finance at Sussex University. She believes bitcoin has no fundamental value and says it is being used more as a toy than as an actual financial tool. In an interview, she mentioned:
If I were an investor now, I would think about coming out of bitcoin soon because its price will probably crash next year.
She is confident that bitcoin’s history will repeat itself. She pointed to 2018 – arguably the worst year for bitcoin and cryptocurrency on record – and says elements of 2018 are likely to occur in 2022. Agreement came from Todd Lowenstein, the chief equity strategist of Union Bank’s private banking arm. He said:
Without question, bitcoin’s price chart appears to track many historical asset bubbles and busts and is carrying a ‘this time it’s different’ narrative just like other bubbles.
One of the big things that arguably allowed BTC to rise as much as it did in 2021 was that governments were printing money every two minutes as a means of providing stimulus measures to people everywhere. He says that bitcoin took on a new form as a hedge tool – something that could potentially protect against inflation. However, he believes the Fed will be more careful about printing money next year, and thus bitcoin won’t serve the purpose everyone thinks it will:
Goldilocks conditions are ending, and the liquidity tide is receding, which will disproportionately harm overvalued asset classes and speculative areas of the market including cryptocurrencies.
By contrast, Yuya Hasegawa – crypto market analyst at Bitbank in Japan – thinks the bull runs that occurred throughout 2021 are likely to continue into next year. Discussing bitcoin and the Fed, Hasegawa explained:
The biggest risk factor, namely [quantitative tapering] by the Fed, has been decided and likely priced in already.
Will a New ETF Make Its Way Into Our Midst?
Some analysts are confident that 2022 will be the year in which a valid bitcoin ETF is introduced. Pro Shares brought the world the first bitcoin ETF, but it has garnered some criticism for tracking bitcoin futures rather than physical bitcoins. Vijay Ayyar – VP of corporate development and global expansion at Luno – said:
The bitcoin futures ETF that launched this year has been widely regarded as not very retail-friendly given the high costs involved in rolling over contracts, which amount to around five to ten percent. Increasing pressure/evidence… points to a bitcoin spot ETF being approved in 2022 mainly because the market is now large and mature enough to support one.