Major cryptos are having a blast this week.

Bitcoin’s price jumped to a four-week high and is up nearly 26% from its January 22 low. The ethereum price climbed by 29%, BNB 17%, cardano 17%, XRP 42%, and solana 26% from their 2022 lows.

Citing favorable technical indicators, crypto analysts believe this rebound may signal the beginning of a long-term bull market.

This Monday bitcoin closed above the 100-day displaced moving average (DMA)—a bullish signal suggesting bitcoin may be in a larger uptrend. In fact, as highly-followed crypto analyst Bluntz observed, the last time this indicator flashed bitcoin doubled.

ADVERTISEMENT

[Ed note: Investing in crypto is highly speculative and the market is largely unregulated. Anyone considering it should be prepared to lose their entire investment.]

In a recent tweet, he said: “Last time we got a nice close above the 100 dma [displaced moving average] was back in July which was the start of an almost 100% rally, so things are defo [definitely] starting to look good again…”

Zooming out

Many analysts are even more bullish on bitcoin over the longer term.

ADVERTISEMENT

A new report from crypto market data firm FSInsight predicted Bitcoin will rally to $200,000 in the second half of 2022. Other bullish targets range from $100,000 (on-chain data analyst Matthew Hyland) to $146,000 (JPMorgan) and even $400,000 (Bloomberg).

So, what is driving the upturn and can it really continue? A whole array of factors could be at play.

In the February Crypto Outlook report, Bloomberg analysts laid out a number of longer-term factors that they believe will inevitably drive bitcoin higher.

For starters, bitcoin’s limited supply will play a crucial role as it matures as an asset class: “Early adoption days and limited supply of the nascent technology asset are prime advantages for price appreciation of the benchmark crypto, which is well on its way to becoming digital global collateral.” At the same time, Bloomberg adds that longer-term holders “appear as reluctant to sell as in 2016”.

ADVERTISEMENT

As another positive driver, Bloomberg points to regulators’ softening stance toward cryptos:

“We expect US policymakers will embrace cryptos with proper regulation and ETFs for these reasons: dollar dominance, jobs, votes, lots of revenue (tax) and – most importantly – it’ll run counter to China’s antipathy.”

Bloomberg also noted that “the process of Bitcoin replacing gold in portfolios is accelerating and we see risks tilted towards more of the same”.

This highlights bitcoin’s transition from a speculative asset into a store of value and appealing alternative to gold—once the ultimate hedge against political and financial uncertainty. Bitcoin’s evolving role is likely to pull in more institutional money going forward.

While all of this may prove true in the long run, there is no certainty that the current rebound will hold out in the coming weeks or even months. The most recent upturn may turn out to be a flash in the pan caused by a massive short squeeze.  

ADVERTISEMENT

As CoinTelegraph reported, bitcoin’s jump to $40,000 last Friday wiped out $50 million of short positions.

“According to on-chain monitoring resource Coinglass, BTC liquidations were $50 million over the most recent four-hour period, with cross-crypto liquidations passing $100 million,” wrote CoinTelegraph’s William Suberg.

Other analysts speculate a crypto ad blitz ahead of the Super Bowl weekend might have added to the recent upturn.

ADVERTISEMENT

A rising tide may not lift all boats

All told, 2022 is shaping up to be a good year for bitcoin. But that doesn’t necessarily bode well for altcoins, especially smaller ones­ (despite their historical correlation to bitcoin).

As the crypto market matures, bitcoin benefits from first mover advantage, its role as an unmatched digital store of value, network effects and finite supply, characteristics that other digital assets cannot replicate.

In fact, Bloomberg analysts believe smaller, especially meme-based, coins, such as dogecoin and shibu inu, “have parallels with AOL and Pets.com”. And that we may well see a repeat of the dot-com bust in more speculative crypto corners as soon as this year.

ADVERTISEMENT

Stay ahead of crypto trends with Meanwhile in Markets…

Every day, I put out a story that explains what’s driving the crypto markets. Subscribe here to get my analysis and crypto picks in your inbox.