Bitcoin’s Natural Enemy Is Influencing Its 2022 Outlook

Back in the first few days of 2009, an anonymous cryptocurrency enthusiast known only by his pseudonym of Satoshi Nakamoto, probably read in The Times newspaper how the Chancellor of Britain had bailed out banks.

In reaction to this news, he or they invented what we now know as the first major decentralized coin, a global monetary system that doesn’t involve banks, governments or companies that can set or determine the price. Thanks to the great number of computers creating and securing the system, cryptocurrencies are the promise of a new financial world without governmental interference or money printers that make populations poorer.

Nakamoto even instilled within Bitcoin’s genesis block’s raw data:

The Times 03/Jan/2009 Chancellor on brink of second bailout for banks.

A title which has haunted the financial world ever since as crypto becomes all the more popular.

Cheap money

For the above reasons, it is all the more surprising that the most decisive influence for Bitcoin in 2022 could come from the Jerome Powell, chairman of the US Federal Reserve.

Speaking to Fortune, Antoni Trenchev, managing partner of crypto lender Nexo, declared that:

The No. 1 influencing factor for Bitcoin and cryptocurrencies in 2022 is central bank policy.

Cheap money is here to stay which has huge implications for crypto, as the Fed doesn’t have the stomach or backbone to withstand a 10%-20% collapse in the stock market, along with an adverse reaction in the bond market.

His company forecasts Bitcoin will reach $100,000 by the end of June and sees great future rises for tokens like Solana and Avalanche. However, “these upstarts — awash with arrogance, attitude and funky narratives — will face the same scaling challenges that Ethereum and other older protocols faced.”

Jeffrey Halley, analyst at Oanda Asia Pacific agrees with him, stating:

Although I expect the speculative zeal to continue in the crypto space, it, like bloated technology valuations, faces a much more challenging environment in 2022. The primary reason is the start of interest-rate normalization by the Federal Reserve but with other major central banks likely to follow as well. That will challenge the raison d’être that crypto is an alternative to fiat money.

Hanging over the crypto space is the threat of more regulation and frankly, with a new coin coming out every week which is ‘the next big thing’ and driven by speculation and not blockchain, I’m struggling to see how any of them will be. I continue to believe that cryptocurrencies are the greatest case of financial-market group-think stupidity in history. The music may keep playing for part of 2022, but the emperor still isn’t wearing any clothes.

Or, a former Citigroup CEO Chuck Prince famously said in 2007 just before stock markets collapsed, as long as the music is playing, you gotta get up and dance. We’re still dancing…

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