Bitcoin price should hold $40K for a $100K bull run setup, says Fidelity executive

bitcoin price, Bitcoin price should hold $40K for a $100K bull run setup, says Fidelity executive

PUNE ( — Jurrien Timmer, Director of Global Macro at Fidelity Investments, shared a series of tweets suggesting the new fundamental support for Bitcoin developing at $40,000 levels, up from $30,000 in 2021.

“Bitcoin has reached a line in the sand at $40k and is now technically oversold,” he tweeted Wednesday, adding that “like $30K, the $40K-level [also] seems to be a pivotal support area.”

In his assessment, Timmer referred to a so-called S-curve demand model, a metric that tracks the Bitcoin market’s previous price tops and bottoms to predict the future price cycles. The Fidelity executive noted that the $30,000-price level acted as support for Bitcoin all across 2021. But in 2022, the potential rebound target shifted to $40,000.

Bitcoin Supply and Demand model. Source: Fidelity
Bitcoin Supply and Demand model. Source: Fidelity

“It’s a moving target that generally provides a fundamental anchor for the price,” he noted, adding that:

“All in all, these charts tell me that Bitcoin should have both technical and fundamental support at $40k. It doesn’t mean it can’t go lower, but it looks like $40k is the new $30k.”

Bitcoin and a majority of high-ranking crypto assets came under pressure after the U.S. Federal Reserve officials discussed the prospects of accelerating their quantitative tightening program. In detail, the central bank expects to unwind its $120 billion a month asset purchasing agreement entirely, which would follow up with at least three interest rate spikes in 2022.

The capital injection that entered markets in the wake of the Covid-19 pandemic-led market crisis, helped fuel rallies across risk-on markets, including stocks and Bitcoin. As a result, the removal of at least $120 billion off the market has created uncertainties about the longevity of the Bitcoin bull run.

Bitcoin-to-Gold Ratio: Rising amidst temporary jitters

2022 has been touted as the year for a continued bull run for Bitcoin despite the rocky start. Evolving as a vetted store of value, the Bitcoin-to-gold ratio has been increasing over the years, 25x at the start of 2022 versus 18x a year ago, and 5x two years ago. The ratio represents the number of ounces of gold it takes to buy a single Bitcoin.

That shows decoupling portfolio diversification strategy where investors contemplate inflation impacts when positioning their portfolios.

Jurrien also compared Bitcoin (BTC) to the more traditional store-of-value, gold, in the short term. Finding the Bitcoin/Gold falling back to the breakout zone last year, he concluded that the ratio marks a moderately oversold territory for the digital asset.

Bitcoin vs. Gold. Source: Fidelity
Bitcoin vs. Gold. Source: Fidelity

Battered temporarily, $100K mark still on cards

“It has been the worst start to a year for crypto assets as Bitcoin trades thinly above the $40,000 handle. Despite added pressure and volatility from equities, there are marked inflows from investors buying the recent dip. As such, the disproportionate impact on crypto could lead to a potential bounce from these levels” quoted Lennard Neo, Head of Research at Stack Funds.

“If inflation concerns persist in 2022, more investors might seek out Bitcoin as an alternative to their cash, which could help send it toward that $100,000 goal line. The coin is heading toward $100,000. Becoming a global reserve asset, Bitcoin may be a primary beneficiary in that scenario” said Bloomberg Intelligence’s Mike McGlone.

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