Bitcoin Could Drop to $5,000 in 2023 ‘Surprise’: Standard Chartered

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Bit­coin could still have much fur­ther to fall next year, accord­ing to ana­lysts at Stan­dard Chartered.

The world’s first and biggest cryp­tocur­ren­cy could plum­met as low as $5,000 in one sce­nario imag­ined by the bank­ing group, as the burst­ing of the “cryp­to bub­ble” has ram­i­fi­ca­tions through­out 2023.

“Yields plunge along with tech­nol­o­gy shares, and while the Bit­coin sell-off decel­er­ates, the dam­age has been done,” writes the bank’s head of glob­al research Eric Robert­sen. 

The pre­dic­tion was made as part of Stan­dard Chartered’s annu­al list of sur­pris­es that ana­lysts believe the mar­kets may be over­look­ing or under-pricing.

Oth­er pos­si­ble upsets for the year ahead include a fall in oil prices, the impeach­ment of U.S. Pres­i­dent Joe Biden, and a col­lapse in food prices.

The list, now in its eighth edi­tion, is not intend­ed to pre­dict high-like­li­hood events but to con­sid­er sit­u­a­tions with a non-zero chance of hap­pen­ing that are cur­rent­ly not part of mar­ket consensus.

If more cryp­to firms and exchanges find them­selves run­ning short of cash, the report said, investor con­fi­dence in cryp­to assets could col­lapse and send peo­ple back to the clas­sic safe haven of gold.

As part of this sce­nario, gold could soar by 30%. The pre­cious met­al has received lit­tle love in 2022, falling 20% from its highs in March, but could ben­e­fit from a drop in cryp­to confidence.

Bitcoin follows broader tech decline

Stan­dard Char­tered also iden­ti­fied the pos­si­bil­i­ty of a broad­er down­turn in tech stocks, exceed­ing even the pum­mel­ing tak­en by many com­pa­nies this year.

Val­ues of com­pa­nies on the Nas­daq 100 have declined by rough­ly 25% across 2022, but ana­lysts com­pared this to the even big­ger decline seen in the dot-com crash of the ear­ly aughts, sug­gest­ing more room to fall. 

Such a decline could be relat­ed to the woes in the cryp­to sec­tor, researchers wrote.

“Per­haps echo­ing the con­trac­tion in the dig­i­tal assets sec­tor, next-gen­er­a­tion tech­nol­o­gy com­pa­nies see a surge in bank­rupt­cies in 2023,” they said.

Mean­while, ear­ly-stage com­pa­nies may find it hard­er in this sit­u­a­tion to get fund­ing as financ­ing costs rise and liq­uid­i­ty shrinks.

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