It's shortened from "cryptocurrency", which derives from "cryptography". Bitcoin does use cryptography, including cryptographic hash functions (for summarizing data in a tamper-resistant way) and signatures (for attesting to authorship), but it doesn't make use of encryption, as the technology doesn't require concealing the content of any communication.

Encryption and cryptography are different things.

Encryption is a type of cryptography, but not all cryptography is encryption.