According to Standard Chartered Bank, the price of bitcoin could drop to $5,000 next year. The bank analyst explained that cryptocurrencies could fall even further and more crypto companies could “give way due to lack of liquidity and investor withdrawal.”
Extreme but possible scenarios
This is a very black table for cryptocurrencies. Bitcoin could drop to $5,000 next year, according to Standard Chartered.
If this level were reached, it would mean a decrease of about 70% or just over $17,000 from the value as of Monday, December 5th. In a report titled “Financial Market Surprises in 2023” retweeted by CNBC, the British bank detailed some possible scenarios that “appear to be undervalued by the market.”
“Yields are falling along with tech stocks, and if bitcoin sales slow down, the damage is done. More and more crypto companies and exchanges are facing insufficient liquidity, leading to further bankruptcies and a drop in investor confidence in digital assets,” said Eric Robertsen, head of global research at Standard.Chartered Bank.
According to the bank, some extreme scenarios “have a non-zero probability of occurring within the next year and … are well beyond market consensus or our own baseline.”
Bitcoin has fallen over 60% this year after a series of bankruptcies has swept the industry. The latest is the FTX cryptocurrency exchange, which has filed for bankruptcy. The impact of the FTX drop continues to be felt in the market.
Can the price of yellow gold rise?
The fall in the price of bitcoin will also coincide with the rise in gold, the bank said, adding that gold could rise 30% to $2,250 an ounce as the cryptocurrency further falls. investor. ”
“The resurgence of gold in 2023 also comes as stocks resume their bear market and the correlation between stock and bond prices turns negative again.”
Gold could regain its safe-haven status as investors flock to the commodity in search of stability amid turbulent markets, the bank said. Standard Chartered is not the first bank to predict a bleak future for Bitcoin.
Investor Mark Mobius told CNBC last week that he expects bitcoin to drop to $10,000 in 2023 as interest rates rise and the Federal Reserve tightens monetary policy.
Should we keep buying bitcoins?
With Bitcoin trading around $16,900, fears of post-FTX market contagion, recession, inflation, and heightened geopolitical risk could see it drop below $15,000. Even the most optimistic bitcoin investors are understandably worried right now.
$15,500 was expected to be the worst-case scenario for Bitcoin before the FTX market was infected. But after the bankruptcy, an English bank announced a new doomsday scenario: $5,000.
This means that bitcoin will fall 65% from current levels. This would lead to a possible mass capitulation and flight of investors or a complete capitulation of the market.
The previous bitcoin bear market led to this panic before bitcoin reached its latest low. In short, there should be such sharp pain points in the crypto market that even the most confident bitcoin investors will decide to wave the white flag.
The market most likely needs one last step to completely capitulate. Only when Bitcoin finally hits the bottom can we hope to see another long-term bull run.