For Bitcoin traders around the world, second trading week of 2022 was a lot better than the first, which was when the digital currency enjoyed a brief Santa Claus rally. On January 10, Bitcoin dipped below the highly psychological $40,000 line of support. While this price level generally suggests the beginning of a bearish period for BTC/USD, it only took a few hours for traders to push the token back towards the $41,500 level, but this is not a sure sign of a rally.
Quite a few market analysts have issued bearish projections for Bitcoin over the next few months, and this is why they believe that the recovery seen on Monday may not last long.
If you still plan on adding the cryptocurrency to your portfolio, now it would be the right time to consider how you could play the upcoming crypto winter.
Bitcoin’s Bull and Bear Markets
As many market analysts have pointed out over the past few months, the price of Bitcoin, the most widely recognized cryptocurrency, is highly volatile. This means that many traders simply need to keep an eye on the market to predict the future price movement of Bitcoin; however, some analysts have argued that Bitcoin experienced four major bull and bear cycles since the start of 2017. This makes it difficult for the average investor to keep track of the crypto market and understand the future price movements of BTC/USD.
In April, 2017, cryptocurrency prices began to trend up and by December, 2017, the total market capitalization of the cryptocurrency market reached almost $700 billion. Bitcoin’s bull market lasted until January, when it fell as low as $3,150. Then, in April of 2018, Bitcoin prices began to drop, and on June 14, 2018, they plummeted to the $3,800 level, where they stayed for a while. Even though the price of the digital asset reached $10,000 by January 2019, it did not recover in February and March. Instead, Bitcoin’s prices dropped to $8,000 by February 28.
There is more than just cyclical price action influencing the projections of market analysts. Inflationary concerns on a global level may dump buckets of ice on the cryptocurrency markets this year, and they may also impact Wall Street over the following months.