FX.co ★ Crypto analysts doubt Bitcoin's bright future

Last week, the leading digital asset declined to $32,900 for the first time since the summer of 2021. However, by the end of last week, BTC increased by 7.3% reaching $37,700.

The recent growth of the US stock market triggered the rebound of Bitcoin. This growth has interrupted the negative dynamics for the first time after three weeks of steady decline. In addition, this once again emphasized the increased correlation of exchange and virtual assets lately.

The leading altcoins followed the growth of the flagship digital asset. Thus, during the week Ethereum jumped by 7%, and Binance Coin increased by 4.6%. At the same time, the total capitalization of the crypto market rose by 1.7% to $1.79 trillion.

At the time of writing, Bitcoin is hovering at $37,000 and its capitalization stands at $706 billion, according to CoinGecko, the world's largest independent cryptocurrency data aggregator.

Despite a temporary stabilization, the situation in the crypto market remains extremely unstable, with BTC risking a third consecutive month of decline. Thus, in January, the first cryptocurrency has already lost about 20%, and the collapse from the November highs exceeded 45%.

The unpredictable trading of the crypto market makes experts give mixed forecasts. The former head of the cryptocurrency exchange BitMEX Arthur Hayes said that in the near future, Bitcoin may collapse to $20,000 once the support of $28,000-$30,000 is broken through.

This level is important for market participants, as it prevented the collapse of BTC in the summer of last year when the value of the coin fell to $28,000. The reason for Bitcoin's large-scale collapse was the largest hash rate drop in the history of crypto-assets amid the mass relocation of miners from China.

By the way, crypto-enthusiasts began to feel more pessimistic about the endless growth of bitcoin. Thus, analysts at JPMorgan, one of the world's largest banks, reduced the fair valuation of BTC to $38,000 from $150,000.

According to JPMorgan, the main reason for such a negative outlook on the future of the main cryptocurrency is high volatility, which limits the use of digital assets by institutional investors.

Experts stressed that the recent sharp pullback by 50% in bitcoin from its November all-time high was a signal to cancel the addition of BTC to the investment portfolios of many institutions, funds, and organizations.

Earlier experts of the bank were betting on the convergence of Bitcoin volatility with gold volatility and the equation of their shares in portfolios of investors. According to the bank's scenario for 2022, the volatility ratio of the main cryptocurrency to gold may reduce by two times.

However, in their latest report, analysts at JPMorgan lowered the price of Bitcoin to 1/4 of $150,000, that is, to $38,000. In addition, the bank's experts did not rule out a further drop in the value of the main cryptocurrency in the absence of market buy signals.