According to Standard Chartered, speculators clinging to the idea that the cryptocurrency crash is largely over risk waking up to a nightmare in 2023.
Eric Robertson, the bank’s global head of research, wrote in a note on Sunday that Bitcoin could fall another 70% to $5,000 next year among the “surprise” scenarios markets are “underestimating”.
Robertson said demand could shift from bitcoin, the digital version of gold, to the real yellow metal, and gold would rise 30%.
That likely outcome includes a resumption of interest rate hikes as economies struggle, more bankruptcies and a collapse in investor confidence in digital assets, Robertson added.
He emphasized that he was not making predictions, but was generalizing scenarios that were far from the actual market consensus.
Bitcoin loses momentum amid expectations of continued interest rate hikes
After the collapse of Sam Bankman-Fred’s FTX exchange and the collapse of his trading firm Alameda Research, the question of what the future holds for digital assets was not so difficult to answer. Aftershocks threaten to bring down more cryptocurrency companies and lower cryptocurrency prices.
For some, much of the bad news has already been reflected in Bitcoin, with the top 100 cryptocurrency metric down more than 60% over the past year.
“The bottom line scenario is that much of the sell-off is over, but investors may not be compensated for market risk in the near term,” Sean Farrell, head of digital asset strategy at Fundstrat, wrote in a note on Friday.
Farrell pointed to the ongoing uncertainty surrounding Digital Currency Group, the parent company of troubled cryptocurrency broker Genesis. Genesis lenders are looking at options to try to prevent the brokerage from going bankrupt.
The cryptocurrency market continues to decline as funds are withdrawn from Ethereum
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