The first 10 days of 2022 were sad for Bitcoin. The cryptocurrency has depreciated by almost 14%, raising doubts about further price increases. Let’s take a look at the current situation and try to make a Bitcoin price forecast for Q1 2022.
What triggered the price decline
First of all, let’s find out what caused Bitcoin’s depreciation. An important role was played by the FRS, which has toughened its rhetoric regarding future plans. Market participants expected a rate hike this year. But no one expected that this could happen already in March. This came as a surprise to many and provoked an outflow of capital from the cryptocurrency market as a whole. This rhetoric from the Fed dampens investors’ interest in risky assets and returns them to more traditional and safer assets.
Despite the fact that Kazakhstan has minimal influence on the Bitcoin market, most of the mining facilities that moved here from China are located in this country. And the disconnection of the Internet for several days triggered a drop in the hash rate, which also put pressure on the price of Bitcoin. Although this event was short-lived.
Bitcoin Outlook in Q1
Analysts are inclined to believe that in the current situation the bulls have little chance of regaining control over the market. Most likely, the bears will continue to control the market, so the downtrend will continue until the end of the first quarter.
Of course, we will see bulls trying to raise the Bitcoin price above $45000, but they will be sporadic and will not receive support. The number of large transactions has decreased in the network. This suggests that the whales do not support the rise in prices and have taken a wait and see attitude. On the contrary, analysts do not rule out the possibility of a drop in the price of Bitcoin below $40000 in the first quarter of this year.
What about technical analysis
On the daily chart, the 50 and 200 daily moving averages form the so-called “death cross”. This pattern indicates further bearish price movement. However, don’t rely on this model. In March 2020 and June last year, we observed similar patterns, which did not lead to a serious change in the situation. In addition, the BTC/USD pair bounced off the support level of 40000 and is trading around 43000 at the time of publication.
On the hourly chart, the BTC/USD pair managed to rise above the price channel and break through the 43000 resistance level. The pair also rallied above the 100-hour moving average.
On the hourly chart, the BTC/USD pair has formed support around 42500. Therefore, it is very important for the bulls to keep BTC/USD above this level. This will increase the chances that the bulls will still manage to gain a foothold and move the support level to the 43000 area. However, the bulls will face resistance in the area of 43200. A move above this level will increase the chances of gains to the 44000 area.
If the bulls fail to keep the Bitcoin price above 42500, we will see a decline to the area of 41600. A move below this level will bring the Bitcoin price back below 41000.