The Crypto Market Outlook Halfway through 2022

If the last few years in Bitcoin and crypto have taught us anything, it is that we should expect the unexpected. Whenever we think that things are finally getting better and that crypto prices are recovering. That is typically when we have seen the bottom pulled out from underneath us. At the beginning of 2022, most people were feeling extremely bullish. We had recovered from the summer lows, then made a new all-time high Bitcoin price of $69k in November. In December we did see prices dip, but most of us were assuming that it was a temporary thing. Surely within the next few months we would be launching off in our rocket to prices that many analysts had been predicting.

But as you already know, up until now we haven't reached new all-time highs. In fact it feels as though it has been a constant downward price movement. Although there were brief moments of hope, but unfortunately we would later learn that this hope would actually be the cause for the next cascade of price drops.

We are now approaching the half way mark of the year. So now would be a great opportunity to talk about key events that took place in the market, prices fluctuations, and then looking towards the 2nd half of 2022.

As noted above, in December of last year, we had just seen a new strain of covid that once again sent panic through the financial markets, which resulted in the price of bitcoin dropping from it's newly set all-time high price.

To begin the year, we saw tensions and protests in Canada that most of us would have never predicted. Whatever you may think about that situation, it was very interesting to see bitcoin used for what it was originally intended for. Bypassing government freezing and blocking transaction. This was the time that many western people learned the true benefits that true decentralized assets like Bitcoin can present.

This led to a bullish movement near $40k, things were looking bullish, and then war broke out between Russia and Ukraine. As expected, this once again led the crypto market prices to plummet. Not only did this war have a large affect between those two countries and the people living there. But it had huge financial ramifications across the entire globe. Oil and food prices soared even further, putting even more strain on peoples wallets. Even though prices during this time would drop, we once again did see benefits of using bitcoin and cryptocurrency. Ukraine was able to accept crypto donations from people all over the world who supported their cause. Not only that, but the people living there were able to evacuate with more of their savings if they owned crypto, then would have ever been possible before. This led to even more people leaning the true value of bitcoin and ethereum.

Inflation. It feels that this has been a constant discussion throughout this year. Not only that, but the talk of the United States raising interest rates in hopes of combating interest has had a huge effect on not only the crypto markets, but all financial markets as well. Each time that there are rumors about rates being raised, the market tanks. This will be an ongoing issue that will be closely monitored. There were many people who were disappointed that bitcoin's price didn't pump throughout this. After all, it was created to help protect us from inflation. While that is true, unfortunately bitcoin is just not that far into its life cycle yet. During times of market panic, cash is king. Bitcoin is the most liquid asset and can be sold or bought 24/7. This is often why crypto will be the first thing to drop drastically, but also the first thing to recover as well. While some people may be disappointed to see bitcoin drop during these times. I find it satisfying. The free market is moving however people want it to, but the great thing is that people have the power of their money at all times. That bitcoin is able to have the liquidity to handle these situations, is very bullish in my opinion.

Something that many people missed or overlooked was that a 2nd country, Central African Republic, made legal tender within their borders. Perhaps it is because the GDP of this country is even less than El Salvador. One thing is for certain, the bitcoin spreading dominoes are beginning to fall down, and the only question is which country will be next.

Just as it seems that bitcoin was moving past this, there was a new "hero" in the crypto markets. Do Kwon and Terra Luna had decided to buy up to $10 billion worth of bitcoin to back their UST stablecoin. After they had bitcoin $3 billion worth, the price of bitcoin had already recovered to $48k. Once again people were back to feeling bullish. Where would the price go after Luna had purchased their full $10 billion allotment. Well, as you already know, there are no heroes in bitcoin and crypto. The UST stablecoin would become unpegged, which led UST and Luna into a spiral of chaos eventually becoming worthless. In attempt to re-peg their stablecoin, Luna would sell nearly all of their bitcoin, which led bitcoin and crypto to dump hard. This could have been the moment that was the capitulation moment for many in the market. The moment that sent regular people away for years, before ever thinking about returning. Potentially the beginning of an extended bear market. However, I found reasons to remain bullish throughout the chaos. The first was that bitcoin's largest piece of FUD had been eliminated and lived to tell another tale. The second reason was that bitcoin managed to stay about $25k while billions of dollars worth of bitcoin were being flood onto the market. Something that I would consider bullish.

Looking ahead to the second half of 2022

Anyone that tells you they know what is going to happen with prices is a liar and shouldn't be trusted. This is a scary time in the markets, and literally anything could happen. Just a few days ago, the CEO of JP Morgan declared that a hurricane was coming to financial markets, and everyone needs to prepare for it. This very well could happen, but there could be a recovery as well.

It is expected that the US FED will continue to raise rates during the next two FOMC meetings. But it is also expected that this rate raises will be within expectations, and after that they will become much more dovish. Which means, the summer might be rough, but heading into the fall could be the time when the market comes back to life. There is also always the chance that bitcoin behaves how it used to during the majority of its life. When it was completely uncorrelated to other finical markets. Only time will tell.

The ETH Merge. The long rumored, long doubted and heavily discussed merge could finally be happening. Some of the main ETH 2 developers have been hinting that August might be the time when the merge finally takes place. Whenever it does finally happen, this could be the catalyst that turns the crypto markets bullish once again. While it won't make gas fees any cheaper at the onset of the merge, it is the beginning of that happening, and also the most difficult juncture of it. While I often am biased on bitcoin, saying people don't have enough of it. I would also say before the merge, people don't have enough ethereum.

My hope for the rest of the year is that world macro news remains quiet. Through the last year bitcoin has had to battle against countless FUD after FUD. This would result in the price dropping. But, each time bitcoin would recover and begin to set its eyes higher. Only to come up against the next macro FUD. Which would send the price downwards again. Whenever there have been quiet periods, bitcoin has recovered. I think that will happen again.

I will not make any outlandish predictions about where I see the price of bitcoin going to by the end of the year. But I will say this. Looking at the price of bitcoin and ethereum currently. I view these buying opportunities as very similar to those of buying during the 2019 price bottoms, or during the 2020 covid crash. These are the days when you build portfolios to set up your future successes.

How about you? What do you think will happen throughout the rest of the year? Are you feeling bearish or bullish?

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As always, thank you for reading!