Cryptocurrencies had a great year in 2021. In this period, we have seen the market go from being classified as a billion-dollar economy into a trillion-dollar economy. Aside from that, cryptocurrencies are gaining visibility in the mainstream world with, for example, El Salvador's adoption of Bitcoin as the official digital currency. As a result, investors are looking for the "new Bitcoin" on the market, hoping to find a great alternative in so-called altcoins. Unfortunately, many traders value an altcoin exclusively…
Though Bitcoin hasn’t seen a historically precedented December takeoff, the bear market may still be a long way out. Mike McGlone – Senior Commodity Strategist at Bloomberg Intelligence – recently called the asset an “enduring bull-market.” Moreover, institutional adoption continues to rise while several indicators suggest that Bitcoin has a bright future in 2022.
Earlier today, McGlone offered his bullish analysis in conversation with Bloomberg’s Paul Sweeney and Sonali Basak. Whereas he characterizes oil as an “enduring bear market,” he calls Bitcoin precisely the opposite. The cryptocurrency is up 64% year to date and has more than doubled in value since this time in 2020.
Firstly, the strategist acknowledges that he must own his inaccurate prediction. Bitcoin is consolidating around the price he thought it would be a year ago. However, its trajectory is far from the one he was expecting. Indeed, Bitcoin is ultimately trading in early February, unable to break resistance in the upper sixty thousand range.
That said, he believes Bitcoin will continue to “do what it’s been doing” before rising to $100k next year, which will be its “next key plateau.” Right now, he sees a price floor right around $45k, which Bitcoin just rebounded from. After that, he expects it to hit near $70k soon before testing another critical resistance.
For a sign of weakness – for a technical guy – you need to sustain below $45k, and that to me is an unlikely event,” said McGlone.
When discussing altcoins, the strategist said that only the “three musketeers” matter: Bitcoin, Ethereum, and stablecoins. Also, he believes that other coins like Dogecoin and Shiba Inu, which he calls highly speculative, will ultimately end in purge.
Bitcoin’s Long Term Strength
Multiple analysts suspect that Bitcoin’s recent flush and consolidation to $45k has marked a local bottom. For instance, McGlone found divergent strength in Bitcoin when examining the futures markets, up 2% this Monday.
Willy Woo – a famous on-chain analyst – found a similar bright spot. When examining NVTS (network-value-to-transaction ratio), he discovered that Bitcoin is oversold. Price tends to bottom out at current NVTS levels.
Will Clemente – Lead Insights Analyst Blackware – recently found a bullish divergence between illiquid supply shock ratio and price. This means that while Bitcoin’s price falls, its supply has been moving to addresses with low spending history, aka HODLers. This effectively takes Bitcoin off the market and helps increase its long-term price.