Bloomberg predicts Bitcoin at $100K in 2022: Here are 4 reasons why
Increasing demand and decreasing supply to positively affect Bitcoin, study says.
Bitcoin is down 27% from its November highs of US$68,000. Is this a pullback before a long run higher, or have we reached the top?
Bitcoin is in a longer term bull market and reaching US$100,000 is a question of time, according to a recent Bloomberg Intelligence report. The report sees plenty of speculation in the crypto space, as indicated by Shiba Inu and Dogecoin, but says Bitcoin should maintain dominance in 2022.
Here are the four main reasons the report says Bitcoin will head higher.
1. Growing adoption
“We expect wider adoption to prevail and overcome most wobbles,” the report says. “[Bitcoin] is well on its way to becoming a digital store-of-value [and] remains in a price discovery mode.”
The report also points that funds are moving away from gold and into Bitcoin, which confirms that the cryptocurrency is increasingly seen as a safe store of value.
Other adoption venues include new US, Canadian and European exchange-traded funds and futures, Bitcoin migration into the 60/40 portfolio mix and the legal-tender status in El Salvador.
2. Diminishing supply
Once fully mined, there will be no more than 21 million Bitcoin. Diminishing supply is a key attribute that will drive Bitcoin’s price to US$100,000.
3. Bond yields and the Federal Reserve actions
Another reason indicated by the report is the inability of the US Treasury to sustain bond yields above 2%. Investors looking to beat inflation will have to turn elsewhere. If we see a more deflationary environment in 2022, this will mostly favor Bitcoin.
Also, if the Federal Reserve tightens interest rates, it will negatively affect the stock market. “Bitcoin will face initial headwinds if the stock market drops, but to the extent that declining equity prices pressure bond yields and incentivize more central-bank liquidity, the crypto may come out a primary beneficiary,” per the report.
4. China crypto ban effect dissipates
China's ban on cryptomining and issues with energy consumption no longer affect Bitcoin’s price, as seen with the bottoming out at US$30,000 in July. Mining operations have mostly moved to the US and Canada, and energy consumption has stabilised.