At current prices, BTC will have fallen by 19.2% over the course of this month — the biggest January decline since 2018, when the digital asset tumbled by 25.4%.
Bitcoin managed to break $38,000 over the weekend, but pulled back during early trading on Monday.
The world's biggest cryptocurrency's struggle to show strength comes as the monthly close approaches.
At current prices, BTC will have fallen by 19.2% over the course of this month — the biggest January decline since 2018, when the digital asset tumbled by 25.4%.
The tepid performance is a sharp contrast to January 2020 and 2021, when BTC rose by 30% and 14.5% respectively.
One potential glimmer of hope for bulls lies in how February tends to be a strong month for Bitcoin's price — with gains recorded in seven of the past nine years. Then again, 2018's appreciation of just 0.47% wasn't all that much to write home about… and was followed by a 32.85% crash in March.
Based on four-year cycles that have proven relatively consistent since the Bitcoin blockchain launched 13 years ago, 2022 should be a rather terrible year for the crypto markets. The Fed's plans to raise interest rates and tighten monetary supplies, along with geopolitical uncertainty, haven't helped matters.
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Numbers to Watch
The latest CoinMarketCap data shows that BTC is currently trading 45.83% below the all-time high of $68,789.63 that was set in November 2021 — but a note by Morgan Stanley has stressed that such declines are pretty in line with what's happened before.
A recently published report by the U.S. investment bank suggests that $28,000 is crucial for Bitcoin to hold — and a slide below this level would take the cryptocurrency to levels not seen since 2020. Indeed, the $30,000 threshold was successfully defended during a correction last summer.
For those looking for confirmation that the downward volatility might be coming to an end, Morgan Stanley points to $45,000 as a key level of interest.
In another potential blow to the narrative that Bitcoin is a hedge against inflation, Goldman Sachs has urged investors to snap up gold in order to protect their wealth.
This could be regarded as something of a U-turn from the U.S. investment bank. At the start of the month, Goldman had predicted that BTC will continue to wrestle away market share from the precious metal as 2022 unfolds — and if the cryptocurrency achieved a 50% of the "store of value" market, prices could accelerate to $100,000.
Sentiment has shifted over recent weeks, not least because Bitcoin has shown a close correlation to the stock markets, with both suffering sharp falls.
All of this has raised questions over whether BTC is an effective tool for diversification right now, and that could ultimately affect whether institutions decide to take the plunge and add the cryptocurrency to their reserves.
