CFund Special Crypto Outlook: The State of the Crypto Market

News 13 February 2022
CFund Special Crypto Outlook: The State of the Crypto Market

CFund Special Crypto Outlook: The State of the Crypto Market

As we enter the second half of the first quarter in 2022, the crypto market seems to show a sign of recovery following the quite significant downtrend from November 2021. Per time of writing, Bitcoin is hovering at 42000 USD area, after getting rejection daily resistance zone of 45000-46000 USD. There is no confirmation bias of where the crypto market will go in medium term. However, the longer-term perspective paints a worrying scenario, which we will need to be prepared for.

The Bullish Momentum is Here, But Confirmation is Yet to be Seen

While the daily timeframe prints a bullish breakout from the downtrend, the bullish confirmation is yet to be seen. Furthermore, the weekly timeframe (as per time of writing) shows a weakening momentum after 2 weeks of a seemingly positive rally.

Fig.1. Clean break out of the trend line. A formation of the higher low will confirm the start of the uptrend

Fig.2. Weakened bullish momentum in weekly timeframe

Bitcoin will need another confirmation before we can see further movement upside. The aforementioned confirmation has a chance to push Bitcoin towards 50000 USD, or 57000 USD.

The Bearish Scenario for Bitcoin

Should Bitcoin fail to make higher low, it is predicted that Bitcoin may once again test its daily key support at around 30000-31000 USD. This level is the strongest support, and has not been broken since 2021. We can expect consolidation on that level before seeing the decision made by the money that flows to the market. The break of the 30000-31000 USD support will probably bring the crypto market towards extended bear market, plunging the price to the next support of around 20000 USD. It is unclear how the price will react after that.

Fig.3. Projection of a bearish scenario for Bitcoin

The Implication for Altcoins

As the crypto market follows Bitcoin overall, should the bearish scenario for Bitcoin happens, most altcoins will likely follow towards further correction. The correction may be deep as many altcoins are already gained hundreds, if not thousands of percent during 2020-2021 bull market.

What Next for Investors

While there is no confirmation about the bearish scenario yet, the bullish scenario for crypto is also showing further weakness day by day. It would be wise to be prudent and not too exposed to crypto, anticipating the bearish scenario.

Should the bear market arrive, for the long-term investor, it might be a good opportunity to accumulate as the next bull cycle is anticipated to happen in 2024 when the next Bitcoin halving occurs.

Disclaimer:

This article is for information purpose only, and does not consist of any financial advice. CFund is not responsible for any loss, or other implications that follow should the readers decide to follow the content of this article

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