Jump to content

Bitcoin Q1 2022 Fundamental and Technical Forecasts

Recommended Posts

Bitcoin Q1 2022 Fundamental Forecast: Macro Will Matter (More) To Bitcoin

Bitcoin Fundamentals – Briefing | Crypto Articles | ForexPeaceArmy



2021 has proven to yet again be an exciting year for bitcoin investors. The nascent asset (yes, I believe it’s still early) has risen to a market cap just under $1 trillion while notching a +100% return along the way.

Over the course of the year, bitcoin has undergone increased institutional adoption, the launch of a futures ETF, and the first major upgrade to the Bitcoin network in four years. The path forward has been anything but smooth as bitcoin investors have consistently weathered periods of gut-wrenching volatility. For some traders, this is an attractive feature of the asset, they eat volatility for breakfast. For others, it’s enough to keep their capital away entirely.


Bitcoin Year Chart

Source: Koyfin

Bitcoin’s volatility is likely to dampen over time, but it’s not going away. The future of crypto is tethered to technological advancements, and higher prices likely hinge on exponential network growth, making the task of forecasting a specific price target a difficult endeavor. Regardless, as bitcoin undergoes further institutional adoption as an asset class, its returns will likely become more of a function of the current macro regime. Hence, without a view of cross asset class relationships and an understanding of where we are in the economic cycle, you might be trading in the dark.


When looking at bitcoin’s historical correlations with traditional assets, there’s a positive relationship with the S&P 500, as well as commodities such as gold and crude oil. This trend in correlations among bitcoin and equities has also been strengthening for much of the year.


BTC Inverse 2017

Source: Koyfin

This could be further evidence that bitcoin is similarly influenced by the outsized impacts of both monetary and fiscal policy in a post-COIVD world, or that growing intuitional adoption has ushered in the same risk management processes employed by these investors across traditional assets. Either way, since January of 2020, bitcoin’s returns have mirrored equities more frequently than ever before.

It’s also worth noting, that like most individual securities within a broad-based equity index, cross asset correlations will strengthen during periods of elevated volatility. Investors often reduce risk exposures in volatile markets, resulting in strengthening correlations across markets. Should equity volatility remain elevated as the Federal Reserve embarks on its process of monetary tightening, this could make for a more challenging environment for bitcoin during Q1 and into Q2.

Bitcoin is also likely to struggle, should the persistent dollar strength of Q4 21 continue. Whether you prefer to view bitcoin as a currency or a commodity (I classify it as a commodity), the dollar is a factor. The strength of this inverse relationship can certainly wane, but going forward, like most commodities, a strong dollar could impede performance while dollar weakness might offer a tailwind.


Bitcoin 2017 to Present

Source: Koyfin


Bitcoin UUP Price Chart

Source: Koyfin


Given these observations, as we look ahead to Q1, I believe bitcoin will ultimately become a prisoner of economic growth and inflation. The macro environment will begin to have a more pronounced impact. The liquidity implications of tighter monetary policy, coupled with a potential growth slowdown, could negatively affect the market’s most volatile asset. No matter how bullish we might be on crypto’s potential over the long run, this warrants consideration.

The yield curve is sending a warning. Bitcoin often exhibits a strong positive correlation with the U.S. Treasury yield curve. As the slope of this curve is often used as a barometer of investors' future expectations for economic growth and inflation, a flattening curve is cause for concern. Bitcoin has done well during periods of curve steepening, while struggling as it flattens. For most of 2021, if you’ve been able to get the slope of the yield curve right, directionally it’s kept you on the right side of the bitcoin trade.

Should this hold true, going forward we’d expect bitcoin’s price to perform well during periods of economic growth and inflation, often coinciding with higher long-term interest rates, while a growth slowdown and disinflationary backdrop could make things difficult for BTC. Similar as to how equities tend to underperform during periods of economic deceleration.


BTC 2021

Source: Koyfin


To establish a realistic expectation for bitcoin’s price over the next quarter, let’s model potential outcomes through the lens of historical volatility.


BTC Volatility Chart

Source: TradingView

As bitcoin has matured as an investable asset, its realized volatility has declined over time. Volatility spikes have resulted in lower successive highs, falling from 190% in 2018, to a lower peak of 110%, during bitcoin’s spring rally.

If we model an expected annualized move using these prior realized volatility highs and a spot reference price of $47,000 BTC/USD, we get the following theoretical trading ranges for the next year.

Volatility & Range

Due to its highly speculative nature, there’s often a positive correlation between the bitcoin spot price and its underlying volatility. Therefore, it's certainly within the realm of possibilities that bitcoin vol can reach levels in excess of 100%, though the price itself cannot go below $0.

To calculate the standard deviation of an expected range for bitcoin’s price over any time period, we can enter our volatility input into the following formula:




n= # days

forward SQRT = Square Root

Applying this same calculation to the Q1 period on a forward basis and assuming a current realized volatility of 90%, we get a statistically probable range for bitcoin of +/- $21,910. Meaning, should bitcoin volatility remain sticky at these levels, it’s entirely reasonable for bitcoin to reach $68,000 on the upside or trade as low as $25,000 on the downside over the next quarter. A wide range, but in line with how bitcoin has traded historically.

By Ryan Grace, 26th December 2021. DailyFX

Link to comment

Bitcoin Q1 2022 Technical Forecast: Putting Pressure on the Long-term Trend

Bitcoin falls by 29% as $2.5 billion of crypto liquidated. What caused the  plunge this time? | Euronews


Bitcoin came off quite a bit in Q4, and could continue to pressure its uptrend in the early part of Q1. This is starting to shape up as another long-term trend test, of which most often BTC has passed. Will this time be the same?

Giving the trend and support from 2020 the benefit of the doubt, a test of the 40k area could bring a bottom that helps send Bitcoin back to the upside. Ideally, we see some type of capitulation price action occur as the test unfolds, demonstrating a wash-out type low that can help clear the way for the upside.

However, should we see support get broken in convincing fashion the retracement would become rather deep for it to indicate a healthy corrective move. On a clear break of 40k the next area of support doesn’t arrive until under 29k.

From a tactical standpoint, it appears longs or would-be longs may want to lean on 40k should we see it come into play soon, but if it breaks then stepping aside for lower levels may prove the most prudent move.


BTCUSD Weekly Chart

BTC/USD Charts by TradingView


Whether you are a new or experienced trader, we have several resources available to help you; indicator for tracking trader sentiment, quarterly trading forecasts, analytical and educational webinars held daily, trading guides to help you improve trading performance, and one specifically for those who are new to forex.

Paul Robinson, Strategist, 25th December 2021. DailyFX

Link to comment

Create an account or sign in to comment

You need to be a member in order to leave a comment

Create an account

Sign up for a new account in our community. It's easy!

Register a new account

Sign in

Already have an account? Sign in here.

Sign In Now
  • image.png

  • Posts

    • ADI Elliott Wave Analysis Trading Lounge Daily Chart Analog Devices Inc., (ADI) Daily Chart ADI Elliott Wave Technical Analysis   FUNCTION: Counter Trend MODE: Corrective STRUCTURE: Flat POSITION: Minor wave 2 of (3).   DIRECTION: Bottom in wave 2.   DETAILS: Looking for support to be found within the end of MG2 at 180, we will start looking for long afte we finally find support on top of TL2 at 200$.         ADI Elliott Wave Analysis Trading Lounge 4Hr Chart, Analog Devices Inc.,  (ADI) 4Hr Chart ADI Elliott Wave Technical Analysis   FUNCTION: Counter Trend MODE: Corrective STRUCTURE: Flat POSITION: Wave {c} of 2.   DIRECTION: Bottom in wave 2.   DETAILS: As we saw on the Daily, we touched equality of {c} vs. {a}. we can expect another leg lower to ideally take wave {a} low out, to then start turning higher.            On April 23, 2024, our trading lounge conducted an extensive Elliott Wave analysis of Analog Devices Inc. (Ticker: ADI), providing a detailed breakdown of its daily and 4-hour chart patterns. This analysis aims to offer precise insights into ADI’s market behavior, which could assist traders and investors in making more informed trading decisions.   * ADI Elliott Wave Technical Analysis – Daily Chart* Our study reveals that Analog Devices is currently in a counter trend phase with a corrective flat structure, specifically positioned in Minor wave 2 of a larger Intermediate wave (3). The key focus is on identifying the bottom of wave 2. The analysis predicts finding support near the MG2 zone around $180. A bullish outlook is anticipated post-establishing a strong support level, especially above the TL2 at $200. * ADI Elliott Wave Technical Analysis – 4H Chart* The 4-hour chart analysis complements the daily insights by delving deeper into the specifics of wave {c} of Minor wave 2. Consistent with the daily observations, wave {c} has reached a point of equality with wave {a}, signaling a potential completion of the corrective pattern. A final leg lower is expected, ideally surpassing the low of wave {a}, setting the stage for a bullish reversal.   Technical Analyst : Alessio Barretta   Source : Tradinglounge.com get trial here!  
    • The Core of William Mason's Investment Philosophy At the heart of William Mason's investment approach is a keen understanding of market dynamics and an unyielding commitment to empirical research. Mason believes that the key to successful investing lies in identifying and following market trends through a systematic, data-driven approach. His system uses a combination of trend lines, moving averages, and other technical indicators to pinpoint optimal entry and exit points, thereby maximizing investor returns while minimizing risk. Market Analysis and the Current Financial Landscape As we navigate through 2024, the global financial markets present a complex tapestry of opportunities and challenges. Mason points out that despite the apparent volatility, there are underlying patterns that, when understood, can lead to profitable investment decisions. For instance, the performance of Berkshire Hathaway illustrates a less volatile yet highly rewarding opportunity in the current market environment. Berkshire’s stock has demonstrated strong returns with less volatility compared to the S&P 500, making it a prime example of how solid, fundamental investing pays off, especially in uncertain times. Diversification and Risk Management A critical element of Mason’s strategy involves diversification and meticulous risk management. By analyzing companies like Berkshire Hathaway, which holds a diversified portfolio across several robust sectors including insurance, energy, and technology, Mason illustrates the importance of investing in entities with strong fundamentals and diverse revenue streams. This strategy not only shields the investment from sector-specific downturns but also positions it to capitalize on multiple growth avenues. William Mason: Advocating for a Smarter Investing Future Transitioning from theory to practice, William Mason not only devised robust investment strategies but also moved to fill a significant market gap by developing a user-friendly stock trading app. This platform caters specifically to Australian investors, providing them with tools and analytics similar to those used by professional traders. By democratizing access to sophisticated investment resources, Mason aims to empower everyday investors to make informed decisions based on real-time data and comprehensive market analysis.
    • AUDJPY Elliott Wave Analysis Trading Lounge Day Chart,     Australian Dollar / Japanese Yen (AUDJPY) Day Chart   AUDJPY Elliott Wave Technical Analysis FUNCTION: Counter Trend                             MODE: impulsive as C                             STRUCTURE: red wave C                             POSITION:  blue wave Z                           DIRECTION NEXT LOWER DEGREES: black wave C                     DETAILS red wave B of Z looking completed, now red wave C of Z of B looking started . Wave Cancel invalid level:97.779     The AUD/JPY Elliott Wave Analysis for the Day Chart provides an overview of the current market trend and likely future developments in the Australian Dollar/Japanese Yen currency pair, utilizing the principles of Elliott Wave Theory.   Function The function of this analysis is described as "Counter Trend." This indicates that the current wave structure represents a corrective move against the primary trend. Counter-trend movements often suggest a retracement or a temporary shift in market direction.   Mode The mode for this chart is specified as "impulsive as C." This mode denotes a stronger directional movement within the Elliott Wave structure, indicating that the current counter-trend may contain a significant shift or wave progression.   Structure The structure is identified as "red wave C," which typically indicates the final stage of a corrective pattern. This aligns with the function of the analysis, pointing towards a potential transition from correction to a new impulsive phase.   Position The position within the broader Elliott Wave structure is "blue wave Z." This position implies that the current pattern is in a complex corrective phase, potentially consisting of multiple interconnected corrective waves.     Direction for the Next Lower Degrees The analysis suggests that the next lower degree trend is toward "black wave C." This provides a directional cue, indicating where the trend is likely to head following the current wave structure.   Details The analysis mentions that "red wave B of Z" appears to be completed, suggesting that a key part of the corrective cycle has ended. This is significant because it denotes the beginning of a new phase, specifically "red wave C of Z of B." This structure could represent the start of a more substantial movement within the current Elliott Wave pattern, indicating a shift in momentum.   The "Wave Cancel invalid level" is listed at 97.779. This level is crucial for understanding where the current wave structure might break down. If the market moves past this point, the current analysis could be invalidated, requiring a new interpretation of the Elliott Wave structure.   In summary, the analysis outlines a transition in the AUD/JPY pair from a corrective phase to a potentially more impulsive structure. It provides key points to watch for traders and analysts, indicating possible changes in market direction. The critical invalidation level gives traders a boundary for risk management, serving as a guide for trading decisions and strategy adjustments.         AUDJPY Elliott Wave Analysis Trading Lounge 4 Hour Chart,     Australian Dollar / Japanese Yen (AUDJPY) 4 Hour Chart   AUDJPY Elliott Wave Technical Analysis FUNCTION: Counter Trend                             MODE: impulsive as C                             STRUCTURE: red wave C                             POSITION: blue wave Z                           DIRECTION NEXT HIGHER DEGREES: red wave C (started)                     DETAILS red wave B of Z looking completed, now red wave C of Z looking started . Wave Cancel invalid level:97.779                                                       The AUD/JPY Elliott Wave Analysis for the 4-Hour Chart provides insights into the current market trends and future projections for the Australian Dollar/Japanese Yen currency pair using the Elliott Wave Theory.   ### Function The function of this analysis is identified as "Counter Trend." This suggests that the current market structure is moving in opposition to a broader, larger trend. Counter-trend movements often signal corrections or retracements within a larger trend.   ### Mode The mode described in this analysis is "impulsive as C," indicating that the ongoing wave pattern is impulsive and represents a final phase of a correction. Impulsive waves generally signify more substantial and direct price movements within the Elliott Wave structure.   ### Structure The structure for this analysis is noted as "red wave C," indicating that the market is in the final phase of a corrective cycle. This structure aligns with the counter-trend function, suggesting a more substantial correction in progress, possibly signaling the beginning of a new trend or the resumption of the broader trend.   ### Position The position within the Elliott Wave cycle is listed as "blue wave Z," indicating a higher degree of complexity and possible combination patterns. This is part of a larger structure that often involves multiple corrective waves interconnected in a larger pattern.   ### Direction for the Next Higher Degrees The analysis points towards "red wave C," indicating that the current impulsive phase could lead to a broader continuation of the trend, suggesting a transition from correction to impulsion.   ### Details The details provided in the analysis indicate that "red wave B of Z" is looking completed, suggesting that a key part of the correction phase has ended. The analysis identifies that "red wave C of Z" is likely beginning, which represents a more substantial impulsive movement in the current cycle. This is a potential signal for traders to watch for continuation patterns.   The "Wave Cancel invalid level" of 97.779 is crucial. This level acts as a boundary; if breached, the current Elliott Wave pattern becomes invalid, necessitating a re-evaluation. This invalidation level is critical for traders and analysts as it guides their risk management strategies.   In summary, the analysis describes a complex Elliott Wave structure, focusing on the transition from a corrective phase to a more impulsive one. It underscores significant points for traders to watch, indicating potential directional shifts in the market.   Technical Analyst : Malik Awais Source : Tradinglounge.com get trial here!      
  • Create New...