Bitcoin, however, failed to live up to expectations, ending the year at $46,306. While many expected a repeat of 2021, with Bitcoin running to multiple all-time highs at the start of the year, 2022 brought a new wave of downtrends.
Experiencing a six-day losing streak, sending its price below $40,000, Bitcoin is having its worst start to a year since 2012. Despite recovering above $42k, since the start of 2022, Bitcoin has lost 13% and 39% from its November 10th all-time high.
The year-to-date price chart of Bitcoin (BTC). Source: TradingView
2022 Could Get Worse for Bitcoin
Many sources have pointed to the COVID-19 pandemic and the relief packages as the start of Bitcoin’s rise to prominence among retail investors.
However, with the Fed announcing it will become more restrictive, there has been a major drop in the price of Bitcoin.
Although investors have had more than their fill of losses, experts believe 2022 could get worse for crypto markets. According to Jay Hatfield, the CEO of Infrastructure Capital Advisors, Bitcoin could slump below $20k as the Fed reduces its liquidity injections.
With Bitcoin recovering above $40,000, an important technical support level for the digital token, there is hope that Bitcoin will embark on a rally to reclaim previous highs.
On the Flipside
- Regardless of its poor start to the year, analysts have backed Bitcoin to hit $100k and become countries’ legal tender in 2022.
Why You Should Care
Like in every industry, linear growth is nigh impossible. Although more volatile, Bitcoin’s decline and corrections are necessary for more expansion.