Bitcoin continues to be under pressure as the Christmas holidays approach, and even though the price is still in the green for the year, people are already questioning what could happen in 2022.
After topping around $68,000, the largest cryptocurrency has been disappointing investors since the end of November, who were expecting a positive seasonality during the last weeks of the year. Corrective moves are part of any healthy market, which is why now would be appropriate to analyze and try to predict whether Bitcoin’s price is going to be characterized by stability in 2022.
Crypto – a volatile market until it matures?
Compared to other traditional asset classes, Bitcoin and the overall crypto-asset sector are still in their infancy, according to experts at Trustpac. As a result, valuations have been volatile over the years, a proper environment for short-term traders, but a challenging one for long-term investors.
However, institutional investors got more involved in Bitcoin during 2021 and that’s an important sign of development, which could provide more stability looking ahead, as long as these market participants don’t trim their BTC exposure by a large.
The next important phase in the maturing process of crypto would be global regulatory framework. Up until now, lack of consistent regulation has been a drag on valuations but if such a thing materializes, it will have a positive long-term impact, as it will further build confidence in digital assets.
Bitcoin – the ‘lesser evil’ out of thousands of cryptos
Small altcoins are generally more volatile when risk sentiment deteriorates in the cryptocurrency market. While Bitcoin has been weakening for several weeks in a row now, losses are even greater when it comes to altcoins that have been outperforming and were in a poor technical position.
At times of uncertainty, BTC is viewed as a safe crypto asset, mainly because it’s the most popular token and there are many people out there interested in holding it. When comparing Bitcoin to small altcoins, differences emerge in terms of price swings, which might remain the situation heading into 2022.
Trading interest, margin trading, and risk sentiment
There are negative signs as well regarding the potential Bitcoin stability in the months ahead. Although digital assets are a new concept, people need to be aware that their massive bull run has been fueled by crypto lending and margin trading. It’s good to see brokerages such as Trustpac covering cryptocurrencies, a move that enables users to get involved in this field.
Having said that, a lack of fiscal and monetary stimulus is expected in 2022, which is why the Bitcoin price could be fluctuating inside a wider range, at best. That is why a reputable trading brand should also offer short-selling options, mainly through CFDs.
For now, the price is trading between $65,000 and $30,000, an area that will remain in play until a breakout on either side occurs. Extreme overbought conditions eased on higher time frames, which is why a turn on the upside should not be ruled out.