First Week Effect, Bitcoin Is Predicted To Be Bullish At The Beginning Of The New Year

At the beginning of the trading year the price of Bitcoin usually spikes. (photo; pixabay)

JAKARTA – Every year at the turn of the year or the beginning of a new year, the price of bitcoin usually spikes. This is a good time to start bitcoin trading for those who are interested.

Several crypto market analysts are highlighting a potential green first week in crypto markets in January as part of what economist and trader Alex Krüger calls the “first week of the year effect.”

Krüger pointed out in a December 29 tweet that for the past four years in a row, Bitcoin (BTC) has enjoyed positive returns in the first week of January ranging from 7% to 36% between 2018 and 2021.

In 2021, BTC grew from 28.653 US dollars to 41.441 US dollars in the first week of January.

Still expect a strong crypto up market in early Jan driven by fund inflows. Then risk-off ahead of the next FOMC (Jan/26) if the next inflation print comes in too hot (Jan/12).

— Alex Krüger (@krugermacro) December 28, 2021

When asked what happened in previous years, Krüger replied, “only 2020 and 2021 matter, different markets, so do with those two data points as you please”.

His optimistic outlook for early January comes from his expectations of strong “fund inflows”, which seems to be in line with the sentiments of Real Vision CEO Raoul Pal.

Pal said in a Youtube interview on December 27 that he believes the Bitcoin sale is complete, and that January will have a strong start as institutional capital is reinvested in the market.

ExoAlpha CEO David Lifchitz believes the institution is still selling even with less than 24 hours left in 2021 to lock in tax losses. It is possible that the rebound of the first week of January could be correlated with the phenomenon.

Fintech and wealth management firm, CEO of deVere Group, Nigel Green, believes that December has been Bitcoin's worst monthly show since May 2021 due to what he calls "panic sellers who are practically giving away their cryptocurrency to wealthy buyers."

However, he is bullish on the largest cryptocurrencies by market cap for the long term. Green feels that Bitcoin can protect investors from global inflation, and that “borderless, global, and decentralized currencies are the future.”

However, not everyone is bullish on crypto in 2022. Professor of Finance at the University of Sussex, Carol Alexander, told CNBC that BTC could drop to as much as $10.000 by 2022. However, she is skeptical and believes that BTC has no fundamental value and has reached the peak of this cycle.

A more appropriate take would come from Todd Lowenstein, the chief equity strategist at Union Bank. The view is that “Goldilocks conditions,” such as the COVID financial stimulus package and low-interest rates favoring high asset prices, are coming to an end which will have a significant negative impact on BTC and traditional markets in 2022.

“Goldilocks is over and the liquidity wave recedes which will disproportionately jeopardize overvalued asset classes and speculative areas of the market including cryptocurrencies.”