According to the Crypto Fear and Greed Index, the market is currently experiencing extreme fear as Bitcoin (BTC) stabilizes below $42,000. The largest virtual currency in the world got very close to $40,000 and investors believe that the sell-off could continue in the coming days. Despite the long-term bullishness about Bitcoin, the short term outlook seems to be controlled by the bears.
Bitcoin Gets Closer to $40,000
According to data shared by CoinGecko, Bitcoin is stabilizing below $42,000. During the first week of 2022, Bitcoin has already lost 12.6% of its value and the price could continue falling in the coming days and weeks. However, we see that BTC has found support between $40,500 and $41,500.
The Fear and Greed Index shows that Bitcoin is now experiencing an extreme fear with 23 points. This is one of the lowest scores in recent weeks. Last month, this index showed extreme fear with 24 points. Meanwhile, last week, it displayed only a market with “fear” and 29 points. However, on January 8th, the index hit 10 points, one of the lowest measures in recent years.
The question is whether Bitcoin will continue growing in 2022 or if it would be traded close to current levels (accumulation period). An accumulation phase could look quite similar to what happened in 2018 with Bitcoin being traded close to $6,500 during several months.
The clear difference nowadays is that Bitcoin is currently being traded at much higher levels than in the past and companies are very interested in this digital asset. Furthermore, Bitcoin has also reduced its inflation rate compared to 2018, hence this is also a positive thing to take into consideration in the coming years.
Despite the current fear in the cryptocurrency market, there are investors and recognized analysts that believe that Bitcoin could experience another leg up to unprecedented price levels. During an interview with Fox Business, Brock Pierce, Bitcoin Foundation chairman, Bitcoin could move towards $200,000 in 2022. This would represent a price increase of almost 5 times from current price levels.
Another thing to point out is that PlanB, known for creating an extremely accurate model that could predict Bitcoin’s price, believes that the virtual currency could be moving towards $100,000 in the near future. Hence, despite the recent fear in the market, it might be possible for Bitcoin to have a positive year in 2022. Nonetheless, this is something that we will discover in the coming months.