A bitcoin to over $100,000 by the end of 2022. The idea makes some people smile, while others are firm believers in it. Right or wrong ? Decryption.
The price of bitcoin broke all records in 2021. On November 10, the cryptocurrency star reached the highest peaks, with a valuation above $68,000. But the fall was also vertiginous. At the beginning of December, the price of bitcoin fell back below the $46,000 mark. Then even below 42,000 dollars in this first week of January 2022.
Despite its high volatility, the queen of cryptos recorded spectacular growth over the year (+58.14%), although significantly below the surge observed in 2020 (+309%). Will the rise in prices resume in 2022, after the correction at the start of the year? Is it the right time to invest in bitcoin? We take stock.
Burgeoning appetite for banks
If until 2020, the bitcoin craze was confined to individuals, 2021 marks a turning point, with the arrival of leading institutional players. “Institutionals and large international companies are investing more and more in bitcoin, mainly to diversify their financial investments,” explains Jonathan Herscovici, founder of StackinSat, a French platform that offers a savings plan in bitcoin.
At first skeptical, the banks of Wall Street have multiplied the small steps towards virtual currencies and the returns – very real, them – that they conceal. In March 2021, Morgan Stanley becomes the first major U.S. bank to offer clients exposure to bitcoin. Then, a few months later, Goldman Sachs announces that it has “successfully launched orders” on cryptocurrency-related derivatives.
The first of the cryptocurrencies in return gains unprecedented legitimacy. Its price jumped for the first time in April, with the listing of the cryptocurrency exchange platform Coinbase. Then it recorded a new peak in October, following the launch of the first index fund (ETF) backed by bitcoin.
But will the initial enthusiasm of the financial giants be confirmed in 2022? This is what Loukas Lagoudis, of the cryptocurrency investment fund ARK36, thinks. Asked by AFP, he expects “the adoption of digital assets by institutional investors and their integration into the traditional financial system to further push the crypto market” in 2022.
That said, Wall Street bankers aren’t the only ones interested in crypto-assets, bitcoin in the lead. Regulators are also watching with concern the arrival of these currencies of a new kind. If El Salvador made an impression by becoming the first country to raise bitcoin to the rank of national currency, not everyone is so enthusiastic. Far from it.
China, in particular, has declared war on cryptocurrencies. And the Middle Kingdom does not do half measures: in September, the Chinese Central Bank published a terse press release, announcing that “commercial activities related to virtual currencies” would henceforth be “illegal”. Overnight, bitcoin became persona non grata. Shortly after, the Chinese authorities again hardened the tone by adding mining, this process of extracting cryptocurrencies, to the “negative list”, a document grouping 120 sectors restricted or prohibited to foreign investors. The decision is not trivial: China alone accounted for almost half of the mining operations in the world.
But there is no need to cross the globe to observe the reluctance of regulators. Last June, the Governor of the Banque de France, François Villeroy de Galhau, was already pleading for the rapid establishment of a European regulatory framework. “Whether it’s digital currencies or payments, we in Europe must be ready to act as quickly as necessary, or risk an erosion of our monetary sovereignty,” he warned. the occasion of the annual Paris Europlace financial symposium. In the absence of visibility on the intentions of regulators, it is difficult to accurately estimate the trajectory that the price of bitcoin could take in 2022.
A bulwark against inflation?
To make matters worse, the new year will be marked by inflation, which is making a comeback: it is estimated at 2.8% for 2021, its highest level since 2008. Good or bad news for bitcoin? Again, hard to say.
Often compared to gold, bitcoin could overshadow the yellow metal and become the anti-inflation safe haven for young investors, according to JPMorgan analysts. An observation shared by Jonathan Herscovici: “We have a long-term conviction on bitcoin which could even reach 1,000,000 dollars in several decades, when it will have assumed its status as a global monetary standard as was the gold before the end of the Bretton Wood agreements in 1971″.
A course still as unstable
The year 2022 began with a sharp fall, of almost 10%, on January 5. A sufficient argument, according to Vincent Boy, market analyst at IG France, to rule out the idea that bitcoin could become a “decorrelated value from speculative markets” or even “a reserve value”: “the significant fall [on Wednesday], well linked to the fall observed in the traditional financial markets, shows once again that bitcoin is, at present, none of this.
Worries about rising prices are also hurting the cryptocurrency star. “There is growing speculation about central bank action to counter inflation,” Susannah Streeter, an analyst at Hargreaves Lansdown, told AFP. However, according to her, it is precisely these “massive bond purchase programs that have flooded the markets with liquidity in favor of the riskiest assets, such as cryptocurrencies”.
If the bitcoin could indeed suffer from the disappearance of the central banks’ economic support measures, the big money managers want to be reassuring: there will be no sudden rise in rates in 2022, specified the European Central Bank (ECB ).