Bitcoin price has jumped to a four-week high and is up nearly 26 percent from the low of January 22. Ethereum price is up 29%, Binance Coin 17%, Cardano 17%, Ripple 42% and Solana 26% from 2022 lows. Citing positive technical indicators, crypto analysts believe this recovery could signal the start of a long-term bull market.
On Monday, Bitcoin closed above the 100-day displaced moving average (DMA). This ratio shows a bullish signal that indicates that Bitcoin may be in a larger uptrend.
In fact, as the much-followed crypto analyst Bluntz observed, this indicator doubled the last time Bitcoin buoyed up.
"When we last had a nice close above the 100 DMA [variable moving average], we're back in July, the start of a nearly 100 percent rally, so good signs are starting to appear again."
Many analysts are even more optimistic about Bitcoin in the long run. A new report from crypto market data firm FSInsight predicts that Bitcoin will soar to $200,000 in the second half of 2022. Other bullish targets range from $100,000 (on-chain data analyst Matthew Hyland) to $145 (JPMorgan) and even $400,000 (Bloomberg). A number of factors may account for these variable estimates. In the February Crypto Outlook report, Bloomberg analysts reveal a number of long-term factors that they believe will inevitably push Bitcoin higher. For starters, Bitcoin's limited supply is likely to play a crucial role as it matures as an asset class.
“Early adoption and limited supply of emerging technology asset are the main advantages in terms of price of the leading cryptocurrency.”
At the same time, Bloomberg adds that long-term investors seem as reluctant to sell as in 2016. As another positive driver, Bloomberg points to regulators' stance towards softening towards cryptos.
“We expect US policymakers to embrace crypto with proper regulation and ETFs for the following reasons: dollar dominance, jobs, votes, lots of income (taxes) and – most importantly – countering China’s antipathy.”
Bloomberg also makes the following assessment on the subject.
“We are seeing Bitcoin replace gold in portfolios accelerating and risks leaning towards more of the same.”
He highlights Bitcoin's transition from a speculative asset to a store of value and an attractive alternative to gold, which was once the ultimate protection against political and financial uncertainty. With Bitcoin's evolving role, it seems likely to attract more institutional funds going forward. While all this is true in the long run, there is no certainty that the current recovery will continue in the coming weeks or even months. Bitcoin's jump to $40,000 last Friday wiped out short positions of $50 million. William Suberg of CoinTelegraph has the following statement on the subject.
“According to on-chain monitoring platform Coinglass, BTC liquidations were $50 million in the last four-hour period, and cross crypto liquidations exceeded $100 million.”
Other analysts speculate that a crypto ad hack ahead of the Super Bowl weekend may have contributed to the recent surge. 2022 is shaping up to be a good year for Bitcoin. However, this does not bode well for altcoins, especially smaller ones (despite their historical correlation with Bitcoin). As the crypto market matures, Bitcoin is taking advantage of first mover advantage, its role as a unique store of digital value, network effects and limited supply, features that other cryptocurrencies cannot quickly copy. In fact, the Bloomberg analyst believes that smaller cryptocurrencies like Dogecoin and Shibu Inu “may have parallels with AOL and Pets.com.” According to analysts, we may see a repeat of the dot-com crash in more speculative cryptos as soon as this year.