A year ago, cryptocurrency analysts, after the successes of 2021, had high hopes for Bitcoin, with some of them seeing that the cryptocurrency could reach $100,000 or more in 2022. But it surprisingly ended up falling to $16,500.
Saddled by the Federal Reserve’s tightening monetary policy, as well as a series of scandals and blowouts for crypto projects, bitcoin lost more than 60% in 2022, its second-worst annual performance ever and only the third year of decline in its history. Other cryptocurrencies also suffered, with ether losing nearly 70%, and the index of the 100 largest cryptocurrencies down nearly 65%.
“People did not understand the value of cryptocurrencies as an asset class,” said Matt Malley, chief market strategist of Miller Tabak + Co. “In 2020 and 2021, cheap money was a driving force behind the rally, thanks to the zero interest rate and massive quantitative easing policies.” With those programs gone, it will take a lot longer for the crypto asset class to reach its full potential.”
As for, Tom Lee of “Fundstrat”, who predicted at the end of 2021, that “Bitcoin” could easily reach $100,000 in 2022 and that the $200,000 range is achievable. “I know it sounds fancy, but it’s very useful,” he said in an interview.
Meanwhile, at the beginning of January last year, Goldman Sachs strategists predicted that Bitcoin would reach $100,000 over 5 years as it took market share from gold. Cryptocurrency advocate Mike Novogratz said that Bitcoin could reach $500,000 in the same time frame.
But perhaps none were bolder than Arc Investments co-founder Cathy Wood, who at the end of November reiterated her prediction of Bitcoin’s $1m target by 2030 — nearly a 6,000% increase from current levels.
Wood said, in an interview with “Bloomberg”, seen by “Al Arabiya.net”: “Sometimes you need to go through crises to see the survivors.” “We think Bitcoin will emerge from this saga.”
Many strategists at the beginning of 2022 misread the strength of the Federal Reserve’s quantitative tightening policy, as it works to curb inflation. Other central banks around the world have also raised rates, creating an undesirable environment for risky assets like cryptocurrencies – and a big change from the strong days of 2020 and 2021, when rates were very low.
Cryptocurrency-focused companies were also hit hard in 2022, with Coinbase Global and Marathon Digital both dropping nearly 90%, and Riot Blockchain losing about 85%, the same percentage as MicroStrategy Inc.
From the internal meltdown of the Terra blockchain, which brought down a number of cryptocurrency lenders, to the bankruptcy of FTX, the year has been one blow after another for the industry.