(Kitco News) With the crypto bull market proving quite resilient in 2021, money managers face a greater risk if they don’t have an allocation to crypto in 2022, according to Bloomberg Intelligence.
“Incentivized by China’s ban and the proliferation of revolutionary technologies such as crypto dollars and non-fungible tokens (NFTs), we expect the U.S. to embrace cryptocurrencies in 2022, with proper regulation and related bullish price implications,” Bloomberg Intelligence senior commodity strategist Mike McGlone said in the 2022 crypto outlook.
Continued adoption will sustain the crypto bull market next year, including getting through any potential corrections.
“Renewed impetus from the Federal Reserve to take away the punch bowl and declining bond yields may point to a macroeconomic environment in 2022 that favors top cryptocurrencies Bitcoin and Ethereum. Crypto assets showing divergent strength vs. equities near the end of 2021 may portend continued digital-asset outperformance in 2022,” McGlone noted.
Despite hitting new record highs of $69,000 in November, bitcoin is still in the price-discovery mode, which is why there is a lot of potential upside left. And the U.S. stock market volatility in 2022, which is likely to be triggered by the Federal Reserve’s monetary policy tightening, could work in favor of the cryptocurrency.
“Compared with broad equities, which haven’t had a 10% correction since the 2020 swoon, the crypto market may have a relative advantage in 2022. Cryptos are risk assets, but the primaries — Bitcoin and Ethereum — may be transitioning toward stores-of-value,” McGlone pointed out. “Diminishing supply is a key attribute shared by the top two cryptos.”
This fairly bullish outlook means that crypto naysayers might have no choice but to join the digital assets club unless they want to expose their portfolios to more risk, added the senior commodity strategist.
“Past performance is no indicator of future results, but when a new asset class outperforms incumbents, naysayers have little choice but to join in. We see this process playing a primary role in 2022, as money managers may face greater risks if they continue to have no portfolio allocations to cryptos,” he stated.
Bitcoin, ethereum price outlooks
On the question of whether bitcoin’s price peaked in 2021 or is just consolidating, McGlone replied that another rally is coming.
“We see the benchmark crypto well on its way to becoming global digital collateral in a world going that way. It’s likely to be about key support around $40,000 and $100,000 resistance in 2022,” he said.
Bitcoin’s current support level is $40,000, and its initial resistance is $70,000. Overall, bitcoin is on a path to hit $100,000 in 2022.
“We see it as more of a question of time, notably due to the economic basics of increasing demand vs. decreasing supply. There are ample examples of Bitcoin simply staying on course in 2022 of its process of adoption into the…
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