5 key crypto predictions for February 2022

Highlights

• Market may have absorbed the rate hike fears, and fundamentals may from here on shape prices
• A rebound in the stock market may also bring a limited relief in the crypto market
• Bitcoin and Ether have both gained of late, and this may translate into gains for other altcoins

The January blues seem to be retreating. Most cryptocurrencies have gained over the past few days, and metaverse tokens are leading this recovery.

Though the total market cap of the cryptocurrency market has yet to rebound to its all-time value, the ongoing recovery has come as a breather. In the first few days of 2022, there were predictions that BTC might reach US$ 100,000.

Let’s look at the factors that may shape crypto prices in February.

1. Rate hikes by central banks

Inflation has been one of the worst economic fallouts of the pandemic. Economies are reeling from record high prices of virtually all goods and services. In this light, all central banks may resort to raising rates in the near-to-medium term. The Fed has indicated that a hike may come in March.

Much of the January sell-off in cryptocurrencies was attributed to fears of high interest rates. Investors re-tuned their risky portfolios.

From here on, there are two likely possibilities. First, the market may have adjusted to the looming rate hikes, and a further sell-off may not be as deep. Second, actual rate hikes may again trigger a wider sell-off in all riskier asset classes including the volatile cryptocurrencies.

Also read: Why are NFTs valuable?

2. Rebound in stocks

The S&P 500 Index has shown signs of rebound over the past few days. After last year’s impressive gains, the global stock markets remained subdued in the initial weeks of January.

Tech stocks suffered a rout, but things may get better in the coming weeks. Cryptos are often clubbed with stocks in the riskier asset category. The price movement in stocks and cryptos has been comparable so far in 2022. Cryptocurrencies have also recovered over the past week, and Bitcoin and Ether are up over the past 24 hours.

Investors may now look favorably at stocks and cryptos after having adjusted their portfolios. But a few experts are also warning of a deep correction in the market and only stocks with strong fundamentals may emerge as winners.

3. Regulators on cryptos

Different regulators in the world have different stances on cryptocurrencies. The emerging economy of India introduced a range of aspects including taxing of virtual and digital assets, and levies on cryptocurrency gifts while presenting the national budget 2022.

In February, a few other countries like India may come up with their plans to regulate cryptos, or even banning their trade. Any move, negative or positive, would have a profound impact on crypto prices. In El Salvador, the success or failure of the Bitcoin legal tender experiment would be closely watched.

4. Price prediction of Bitcoin

Bitcoin remains at the top of the crypto world with a dominance of nearly 42 per cent in the total market cap.

Data provided by CoinMarketCap.com

Bitcoin’s 2022 price movement has been anything but impressive. The headlines about BTC breaching the US$100,000 milestone are now nowhere in sight. Trading at nearly US$38,000 currently, Bitcoin is down from its peak price, but has gained nearly seven per cent over the past one week.

In February, Bitcoin may rebound more, but this largely depends on investors’ approach toward riskier assets. Cryptos are volatile and if the Fed’s rate hikes suck liquidity, BTC may feel the heat. That said, BTC price may rebound to US$45,000 by the end of February if there are more buyers than sellers.

Also read: Top 5 cryptocurrencies to watch in February 2022

5. Price prediction of altcoins

Altcoins are led by Ether, which has also gained over the past one week.

Data provided by CoinMarketCap.com

Other major altcoins include blockchain networks like Solana and Fantom, and metaverse tokens like Decentraland and Axie Infinity. The latter have strongly rebounded over the past few days, and if Sony and Microsoft’s metaverse moves bring back bulls, gaming cryptos may further rise.

Ether’s price may reach US$3,200 by the end of this month. But for this to happen, Ethereum will have to build on its lead over competitors like Fantom and Cardano.

Also read: YouTubers and cryptocurrencies: Should you be influenced?

Viewpoint

Predicting anything about cryptocurrencies and their linked blockchain projects is a difficult exercise. Uncertainty grips the market a lot more when macroeconomic indicators like inflation and growth are not favorable. That said, cryptos are on a rise of late, and this limited rally could translate into gains for investors that buy and sell cryptos at the opportune time. Cryptos remain a close watch no matter their volatility.