Bitcoin started by plunging to USD32K, and now it is searching for a route to USD50K. The price has become so volatile and the big question is can it blast past the USD50K mark?
Since the start of 2022, Bitcoin (BTC) has been on a roller-coaster ride. This started with a downshift to USD32 in late January to a sharp rise to USD45K in early February. Amidst the geopolitical tensions and emerging macro weaknesses, Bitcoin appears to be struggling to do well and trying to maintain a positive trajectory.
We can say for sure that Bitcoin is in a do-or-die sort of a situation: where it could blast through the USD 50 mark or get threatened by a death point. So, what will be the ultimate outcome?
The price of Bitcoin (BTC) is impacted by many factors, such as supply and demand, emerging policies, institutional adoption, and the introduction of new features. However, it is currently being impacted mainly by geopolitical happenings in the world. While these happenings are not new at all, the intensity is monumental because of the Russia-Ukraine war. The main causes of volatility include:
- The overall fall of the value of financial assets.
- Russians’ growing use of digital assets to evade sanctions by the west.
The BTC Support Level: Why It Matters by Romain Chiaramonte
As said by Romain Chiaramonte, Bitcoin (BTC) has found a sort of a support level around USD37-40K, from which it could make a comeback. This could be the best point for stabilizing future outcomes. However, the resistance at around USD47k might prevent it from hitting the USD50K mark. This is why Romain Chiaramonte argues that BTC is on a major mission of breaking through the resistance.
To understand this trend, let’s take a flashback for about one year. During this period, BTC capped between USD33K and USD69K marks. Analysts, such as Kate Waltman, a New York-based certified public accountant specializing in crypto, had predicted BTC to reach USD100K mark in 2021 and 2022; it appears to be pretty difficult. However, a new support level might act as a trigger in the growing global tension.
Geopolitics Escalations and Their Impacts on Crypto Market
Starting from the moment that Russia invaded Ukraine and widened its tension with the west, more Russians have been transferring wealth to cryptos, especially Bitcoin (BTC). There are concerns that the Kremlin might also follow the same trend. According to Roman Bieda, the head of fraud investigation at Confirm, it is possible for people to use cryptos to evade sanctions or hide their wealth.
The UK and US are working extra hard to cut Russia completely from the international financial flow. This started with the Russian banks getting cut off from the global SWIFT international payment system. Now, the Russian banks are looking for new ways to convert Roble’s value and continue doing business internationally because they cannot use conventional methods to send or receive money from other banks or convert it to euros or Dollars.
One of the options on the table is shifting to the Chinese Yuan as the preferred currency for overseas transactions. The next option is cryptocurrencies and using them in foreign countries. If the country goes for the latter option, Russia might opt to sell its mineral wealth and receive payments in BTC and not dollars. However, experts like Romain Chiaramonte argue that the crypto market lacks ample liquidity to do so.
Another thing worth noting is that the price of BTC is gaining value when measured in Rubles. However, the value of the Ruble is going down when measured against USD, making Bitcoin to be considered a perfect pick for most Russians. Note that the demand is coming mainly from the heavily wealthy persons in Russia who are considering converting their cash to cryptos.
Long-Term Price Review: What Does it Suggest?
Experts are predicting that BTC is likely to break out and find a new liquidity level above USD46K. The price could surge well beyond the level reached in March 2022. If you are an investor, this super volatility can be confusing, but this is the time to think long-term. According to Humphrey Yang, the personal finance expert behind Humphrey Talks, the best thing is not to think about the current trends so much because it is likely to make you sell at the wrong time. So, take a position, walk away, and consider coming back in about three, six, or twelve months.
