Bitcoin-at-$100,000 Calls Become Uncomfortable After Pullback
Bitcoin’s getting a drubbing this week as the Federal Reserve readies a removal of stimulus, but bulls are feeling as emboldened as ever.
The largest cryptocurrency by market value has shed about $80 billion since the start of the year amid a slump that’s brought it to its lowest levels since its early-December flash-crash. But out have come predictions it can still reach the vaunted $100,000 level at some point this year.
It would have to more than double from current levels around $42,900 to arrive at that milestone. Analysts say it’s not that it can’t -- it’s posted plenty of triple-digit annual returns over the past decade -- but that the road ahead might be more difficult for cryptocurrencies with a more hawkish Fed.
“Cryptocurrencies benefited from the Fed’s massive liquidity injections since 2020,” said Matt Maley, chief market strategist for Miller Tabak + Co. “It pushed these assets too far, too fast.”
In conjunction with riskier assets like U.S. equities, Bitcoin and other digital assets tumbled Wednesday after minutes from a recent Fed meeting showed officials were willing to withdraw stimulus sooner than many had previously expected.
The release pointed to earlier and faster rate hikes by the central bank, which would increase the cost of capital throughout the economy. That has the potential to keep investors away from cryptocurrencies, many of which posted huge gains over the last two years amid amped-up stimulus.
But not everyone agrees that this environment is lousy for crypto. Bitcoin is a risk asset that’s evolving into a digital-reserve asset in a world going that way -- and that has positive implications for its price, according to Bloomberg Intelligence’s Mike McGlone.