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What's driving Bitcoin's price action to start 2022?

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CoinDesk Learn Editor Ollie Leech joins Yahoo Finance Live to discuss the latest with digital assets.

Video transcript


- Welcome back. Bitcoin is tracking a move lower across risk assets this afternoon. The largest cryptocurrency by market cap is down more than 1% to hover around $46,000. Here to discuss more is Ollie Leech, CoinDesk Learn editor. Ollie, thank you so much for joining us.

I first want to ask about the price action that we've been seeing in Bitcoin recently, because for stocks, we do have the saying, as January goes, so goes the year, where strong returns at the beginning of the year do tend to bode well for the rest of the year's returns. But with Bitcoin, is the drop that we've seen over the first couple of days of January a harbinger for what investors might see over the course of the rest of 2022?

OLLIE LEECH: Well, there's a good question. I think seasonality is always something that a lot of investors are mindful of, and in Bitcoin's case, we in-- the wider crypto market in general, we always see a downturn after Christmas, particularly into January as we go into March. This is normal. If you look back over the last five, six years, you'll see that it's always returned a negative return, and this is something that we're seeing now.

Obviously, Bitcoin since reaching that all time high in Q4, we're now starting to tumble down from that. This is kind of expected, you know. You see a lot of people profit-take. We're now waiting to see for some new bullish information or market movement that can sort of get everyone behind Bitcoin again. So yeah, we're just kind of waiting for that right now. We're just kind of waiting to see what's going on.

NFTs are now starting to have another rally. It seems that that's attracting a lot of attention and investment at the moment. So Bitcoin, we're just kind of waiting to see what's going on. You've got a Bitcoin ETF that's kind of waiting in the wings. That's been delayed again. So there's a lot of things we're waiting for. We're just waiting for some signs to get into the market again.

- Ollie, we always approach the discussion about crypto, especially Bitcoin, from the investment standpoint. I'm curious if you can help us understand, though, the impact that those who are seeking Bitcoin as a store of value, especially in countries that have incredible inflation. I'm thinking Turkey, right now, and there are other places. Do we have any sense of the impact that individuals who might be trying to protect themselves from their political chaos in their own countries and inflation that that has on, you know, the fluctuations in Bitcoin, or is it a minuscule amount. Because, I mean, right now Bitcoin is going down. Doesn't seem that those people rushing in to protect themselves might be driving it up.

OLLIE LEECH: I mean, yeah, Turkey's got a thriving community, but I don't think it's a sizable amount to really make that much of an impact on Bitcoin's movement. At the moment, a lot of it's institutional driven. These are driving huge amounts of money into Bitcoin all the time. And so I think a lot of those are pulled out as it reached that all-time high. They're waiting to get back in. Like I said, they're waiting for something to give them a reason to get back in.

People will be buying into it, I'm sure, as a store of value, and like I said, people that are suffering from huge amounts of inflation will be buying in and accruing Bitcoin and other assets, I'm sure. But yeah, I don't think this is contributing to the volatility right now. We're just seeing a number of things. You know, we've got a lot of regulations coming out. India, as you know, is now toying with another ban. We've got a strengthening dollar. You know, these all come into effect when you're talking about Bitcoin's price.

- Ollie, we've been hearing more about Bitcoin $100,000. Goldman Sachs strategist said in a report yesterday that Bitcoin could reach that level in the next five years, and El Salvador's president also made that call, but for this year. What do you think about when Bitcoin may, if at all, reach that level?

OLLIE LEECH: I'm not too sure, but yeah, no, the president of El Salvador, Nayib Bukele, has made some interesting predictions. He's-- yeah, exactly, you're right. He made a prediction that he believes that sometime this year we'll see a six-figure Bitcoin. Nexo's founder has also made that claim. He believes we'll see that sometime in the middle of the year. But a couple of people also sort of saying that, you know, we might be in for a bearish year. It's difficult to say.

If we look at Bitcoin's chart right now, we're below the 200 moving average on the daily. This is an indicator that a lot of people use to kind of gauge whether we're in a bullish or bearish trend. And right now, even though we are just slightly under that line, there's a good chance that would be a strong resistance going into into the next couple of months. And if we can't break above it, then we're looking to go south at the moment.

Can we reach 100k? I mean, if we do see a Bitcoin ETF approved, the spot ETF in the US, that could give people a reason to get back into it. We might have to just wait for April for that seasonality to kick back in. We usually see people buy up at that point.

- Ollie, we talked about this yesterday with another crypto guest, but I'm curious. This Matt Damon commercial, you know, fortune favors the bold or the brave or whatever. Why do some crypto enthusiasts take issue with this ad?

OLLIE LEECH: Yeah, I mean, it's really caused a lot of a stir. And interesting it aired in October, and now we're only starting to see people really kick off about it now. I personally quite like the advert. But no, it's, I guess, the message behind it is kind of irresponsible. It's kind of encouraging people to take a risk in something that they may not necessarily have a deeper understanding of, and it's very easy to lose your money. And to just say fortune favors the bold, just throw your money into it, be brave, is not the message you want to send to people, particularly when so many people have lost their life savings by doing exactly that, you know. So it's-- and to have Matt Damon being at the forefront of that, it's-- yeah, people have taken umbrage with it, and I can understand why.

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