Is Bitcoin Still The Best Asset To Hold in 2022?
Bitcoin hit all-time highs in October, but it is set to outperform all financial assets in 2022 as well. We are going to be breaking down the news of the New York mayor’s pro-BTC comments, growing needs for more Bitcoin ETFs and positive predictions from critically regarded hedge funds like JP Morgan.
Bitcoin’s Possible Uptrend
Source : TradingView — FXstreet
According to CoinMarketCap, at the time of writing, Bitcoin is currently trading at $61,570 with a 24-hour trading volume of a little over $3 trillion. Analysts at FXstreet have stated that the current charts are hinting at a possible consolidation. For the past two weeks, BTC has been consolidating right under the psychological barrier of $62,000. Bitcoin did go on and break this barrier in the initial few weeks of October and made an all-time high of $67,000 but since then, it has not budged. By the looks of it, this obstinate barrier that has not had much movement is an indicator of reduced volatility. If the consolidation continues, an explosive uptrend could be upon us for the biggest cryptocurrency in the world. Here’s a few news sources that could act as catalysts for this uptrend.
New York Mayor Wants To Get Paid In Bitcoin
The financial capital of the USA also happens to be the hardest city in the country when it comes to cryptocurrency support. Back in the day when Bitcoin was just getting started, the mayor and government made it impossible to get into cryptocurrency after banning several exchanges and passing a Bitlaw that restricted access to cryptos. But thankfully the city is rejuvenating its viewpoint towards crypto under the brand new mayor-elect, Eric Adams. Adams is pro-Bitcoin and crypto and he’s gone all out in trying to bring back crypto in New York City.
To show just how serious he is about cryptocurrency, Eric Adams has announced that he wishes to receive his first 3 paychecks in Bitcoin.
https://twitter.com/ericadamsfornyc/status/1456311827550384129
The tweet was in response to Francis Suarez, the mayor of Miami. Suarez is also big on the crypto industry and announced that he would like to get paid a month’s salary in crypto, but Adams decided to one up him.
A mayor who backs this financial currency is what the city needs right now, since the popularity is immeasurable but the government backing is extremely poor. New York is the second largest crypto holder in the USA and new initiatives state that this popularity is only growing. That is why the backing of cryptos from the mayor himself could promote widespread adoption.
US Legislators Ask The SEC To Add A Spot ETF
The addition of the first-ever US based Bitcoin ETF was one of the main criterias that led to October’s Bitcoin bull-run that took them to new highs. But one major scepticism has been over the type of ETF itself. This ETF is a Bitcoin futures based ETF, which means that it does not trade the actual underlying asset. The futures based ETF tracks a derivative of Bitcoin instead. On the other hand, a spot ETF gives investors direct access and exposure to the underlying asset, in this case, that asset being Bitcoin.
As it turns out, some pro-cryptocurrency US legislatures are not too happy about the missing Bitcoin spot ETF. The legislatures, Tom Emmer and Darren Soto, sent a letter directly to the SEC (securities exchange commission) questioning the logic behind refusing a Spot ETF and accepting a futures based contract itself. They argue that the spot ETF would actually be less volatile for investors, since it may impose more fees.
While the two legislatures were critical, they still believe that the futures ETF will have a massive impact in exposing Bitcoin to the retail sector and broader impact. Now that US legislatures themselves are pushing on the need for a spot Bitcoin ETF, we are likely to see more BTC and crypto ETFs down the line. The SEC is currently debating the idea of adding a spot Bitcoin ETF.
Bank Of America COO On Possibility Of Taking Out Loans Against Cryptocurrency
Now this is far from confirmed. In fact, if I said this to anyone about 6–7 years ago, they’d probably burst out laughing. But over the years, the banks have changed their outlook on cryptos. At first you couldn’t even begin to think about using your cards to deposit money into your crypto exchange, but now many banks think that crypto and the Web 3.0 revolution is going to help banks with financial and digital transactions.
One of these believers is Bank of America’s COO, Tom Montag. “I believe some of the things that are happening today will provide that technological jump that allows banks to be more efficient, [have] less errors, be more compliant,” said Tom about crypto during a Chainalysis event on Thursday in New York City. “So we look forward to figuring out a way to use it best and have it be part of the system.”
But in the same event, the Chainanalysis CEO, Michael Gronager said that there is one main counter incentive stopping this from happening. Gronager said that Bank of America and other banks looking into blockchain technology will be very hesitant due to the volatility of the market. Many banks hesitate to take out loans for people looking to invest in the stock market, which is far less riskier than cryptocurrencies.
This may sound like there is a lot for the crypto space to achieve before the possibility of banks being involved, but the gap is there to be filled. Banks feel that many cryptos and blockchains are providing faster transaction times and cheaper trading fees, which can help them in the long-run. But the main concern is the stability in the market. The first step to moving in this direction is actually discussing it, and it seems like banks have at least one eye open.
JP Morgan says Bitcoin will outperform in 2022
When one of the strongest hedge funds in the world backs Bitcoin, you just can’t help but take notice. Although JP Morgan analysts believe that the current price zone is overbought and that the fair value of Bitcoin is around $35,000, they still think the currency will do exceptionally well in 2022. The analysts said, ‘Digital assets have emerged as a clear winner post pandemic, with retail investors joining institutional investors such as family offices, hedge funds and real money asset managers including insurance companies in propagating the asset class’.
The analysts also went on to say that, “This challenges the idea that a price target of $100K or above, which appears to be the current consensus for 2022, is a sustainable Bitcoin target in the absence of a significant decline in Bitcoin volatility.” Although the comments make it seem like Bitcoin is a buy, it implies more about the popularity surrounding the market in the current time. Since most financial and digital assets from Bitcoin all the way to Tesla are not trading at fair value, a huge correction does not seem to be on the horizon either.
Aside from JP Morgan, Morgan Stanley, UBS, Citigroup and Goldman Sachs are also among the many hedge funds that have been looking to hire crypto experts.
As it currently stands, Bitcoin equates for about 40% of the cryptocurrency market cap and is not far away from Apple and Amazon’s total market capitalizations either. One Bitcoin is valued at just under $62,000, but it could change for the better or worse in the last few months of 2021.
