Highly respected equity research analyst and investment strategist Lyn Alden said in a recent interview that she expects a bumpy year ahead for Bitcoin, with the possibility of a capitulation event.
In a recent interview with Stansberry Research, Alden said that she is “not particularly bullish” on Bitcoin in 2022. Alden is using the Purchasing Managers’ Index (PMI) — “an index of the prevailing direction of economic trends in the manufacturing and service sectors” — to figure out the price trend for Bitcoin.
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As reported by The Daily Hodl, Alden said:
“Bitcoin’s major bull runs historically – there’s only a sample size of about four of them: 2011, 2013, 2017 and 2020. Those occurred during rising PMI environments, so economic acceleration. So generally the type of period now has historically not been great for Bitcoin’s price action…
“Right now, Bitcoin’s classified due to its volatility as a risk asset by most pools of capital, so I’m not particularly bullish for the calendar year 2022.“
According to Moody’s Analytics, the U.S. PMI is currently around 57.6, which is a drop of nearly 10% from March 2021. Alden believes that a falling PMI combined with the Fed’s current hawkish mood could lead to a capitulation event for Bitcoin:
“If you get some sort of market turbulence, you could have a capitulation similar to March 2020 or similar to the fourth quarter of 2018 where the Fed was still trying to tighten into a declining PMI environment.
“If you get a capitulation like that, I would consider that a buying opportunity. I don’t know if we’re going to get that or not. We certainly could see a break below $30,000 in that kind of capitulation type of environment.”
However, Alden remains long-term bullish on Bitcoin:
“Looking at multiple years, say a three to five-year time period, I’m still structurally bullish on Bitcoin when I look around the ecosystem, I look around what’s happening on the Lightning Network. Every cycle, the infrastructure gets built to absorb new types of capital.“
The views and opinions expressed by the author, or any people mentioned in this article, are for informational purposes only, and they do not constitute financial, investment, or other advice. Investing in or trading cryptoassets comes with a risk of financial loss.