Bitcoin has been trending down in recent days, posting a 24-hour loss of 1.8% and a seven-day correction of 10.5%. The benchmark cryptocurrency appears to be reacting to macroeconomic factors and may have more short-term downsides.
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As of press time, Bitcoin is trading at $42,076 after testing levels around $40,500. It remains to be seen whether current levels will hold and whether the cryptocurrency market will experience a rally or continue its downward trend towards $30,000.
BTC in downtrend on the 4-hour chart. Source: BTCUSD Tradingview
Today’s sell-off was apparently triggered by the release of the US unemployment report. As of December 2021, around 200,000 new jobs have been added to the US economy, well below the expected number above 400,000.
This has increased the possibility, along with the increase in inflation metrics for the EE. UU. which is expected to reach around 7% in the next CPI reports, which the Federal Reserve of the EE. UU. increase interest rates. Therefore, creating less favorable conditions for the global market and risky assets such as Bitcoin.
As NewsBTC reported yesterday, some experts believe risky assets may experience unstable and bloody months in the short to medium term, but would ultimately benefit from a rise in interest rates. Bloomberg Intelligence Senior Commodities Strategist Mike McGlone remains confident that Bitcoin will hit $100,000 in 2022.
On a different note, the head of Global Macro at investment firm Fidelity, Jurrien Timmer, believes that Bitcoin will “frustrate” both bulls and bears. Many of the former are expecting a quick jump towards McGlone’s price target, while the latter are targeting $30,000 and much less. Timmer said:
If real rates remain negative, gold and bitcoin could do well this year. But the impetus of “excess money” (M2 growth minus GDP growth) has all but disappeared. Perhaps gold and bitcoin will continue to frustrate the bulls and bears by doing very little in 2022.
Source: Jurrien Timmer via Twitter
Will Bitcoin maintain a “crab-like” price action in 2022?
Timmer further explains that Bitcoin, gold and other assets have reacted positively to the increase in the US money supply. As the Fed tries to implement changes to its monetary policy, BTC may underperform.
In the first half of 2021, the benchmark cryptocurrency enjoyed an impressive rally as the Fed contributed to the global rise in liquidity. Then, BTC moved sideways in the $30,000 to $60,000 range as the macroeconomic outlook changed. On this topic, former BitMEX CEO Arthur Hayes wrote:
Since M2% growth stopped, Bitcoin has been trading sideways. If M2 is set to hit 0% and possibly even go negative before long, the natural conclusion is that Bitcoin is likely (in the absence of asymptotic growth in the number of users or transactions processed over the network) will also drop much more. .
In any case, the outlook for 2022 looks more complicated than expected and can be explored with surprises and unexpected twists.