Before even entertaining that argument, it is wiser to look at Bitcoin's market cap performance over the years.
In the six-month timeframe chart above, one can see that there has not been a single instance wherein the Bitcoin market capitalization had risen by over $1 trillion. Similarly, there also has not been a single case where Bitcoin's market valuation dropped by more than $190 billion in six months, as required in the event of a BTC price drop to $10,000.
Despite not rising or falling drastically, the Bitcoin market — as per historical data — attracts more capital in that it spits out, indicating why its price per unit has rallied by more than 14,250% to date since January 2014.
Now, returning to the "why-it-has-not-happened" argument, there seems to be only one answer: uncertainty. And uncertainty has many branches, ranging from regulatory troubles to fears that the Bitcoin market may need a correction after rallying for almost two years in a row.
As the Fed unwinds its quantitative easing policy to tame inflation, it effectively removes the excess dollars from the market. And as the markets — hypothetically — run out of cash, they raise it by selling their most profitable investments, be it stock, real estate, Rolex watches or crypto.
Therefore, the next six months could turn out to be a seesaw between those who need cash and those who don't. Inflation led by the dollar devaluation could keep many investors from selling their assets, including Bitcoin. But with the Fed switching off its liquidity plug, crypto markets could face difficulties in attracting new money.
This leaves Bitcoin with investors and firms that have excess cash in their treasuries and have been looking to deploy them into easily liquefiable assets.
So far, Bitcoin has attracted big names like Tesla, Square, MicroStrategy, and others. So naturally, it would take at least a popular Wall Street firm's willingness to add Bitcoin to its treasury to enable BTC's push toward $100,000.
Waiting on the retail boom
Meanwhile, as inflation creeps into people's everyday lives, their likelihood of adopting hard assets to protect their savings could also mean a boon for the Bitcoin market. For instance, BTC's climb to $69,000 last year coincided with an unprecedented spike in retail interest, per a Grayscale Investment report.
The U.S. firm surveyed 1,000 investors and found that 59% were interested in investing in Bitcoin. Meanwhile, 55% said they had purchased the assets between December 2020 and December 2021.
The Fed's "taper tantrum" is impacting investor confidence
The most commonly discussed reason for Bitcoin's recent drop from $69,000 to $34,000 is the U.S. Federal Reserve's decision to end its $120 billion a month asset purchasing program sooner than anticipated. This is expected to be followed by at least three interest rates hikes from their current near-zero levels.
These loose monetary policies ended up injecting about $6.5 trillion since the coronavirus-induced global market crash in March 2020. As a result of the excess liquidity, the dollar's value dropped while riskier assets, including Bitcoin, became ballistically bullish.
According to Crossborder Captial founder Micheal Howell, the excess funds in the market 'had to go somewhere.'
Whether boom or bust, here's what needs to happen
If, Bitcoin were to reach $100,000 by the end of June 2022, here's what would need to happen.
The M2 money supply remains at an all-time high.
The planned interest rate hikes fail to keep inflation below the Fed's 2% target.
The number of non-zero Bitcoin wallets continues to rise to new record highs.
More companies add BTC to their treasuries.
Meanwhile, Bitcoin could crash to $10,000 if:
Long-term investors decide to dump Bitcoin to raise cash.
Regulatory issues and a sharp correction in equities prices weighs on crypto pricing.
Some unforeseen market manipulation or black swan event tanks BTC price like the March 2020 flash crash.
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