Bitcoin could fall to $5,000, Standard Chartered predicts

Bitcoin could fall to $5,000 next year in a market surprise that investors are underpricing, according to Standard Chartered.

If that level is reached, it would mark a roughly 70% drop from Monday’s price of just over $17,000 for one bitcoin.

In a note entitled “The financial-market surprises of 2023”, Standard Chartered outlined a number of possible scenarios which “we feel are underpriced by the markets”.

“Tremors are plunging along with tech stocks, and while Bitcoin sales are slowing, the damage is done. More and more crypto firms and exchanges are finding themselves with insufficient liquidity, leading to further bankruptcies and a collapse in investor confidence in digital assets.” Eric Robertsen, Global Head of Research in Standard Chartered Bank, said in the note on Sunday.

Robertsen said the somewhat extreme scenarios “have a non-zero probability of happening in the coming year and … fall significantly outside market consensus or our own fundamental views.”

Bitcoin has already fallen more than 60% this year after a series of high-profile collapses of projects and companies plagued the industry. The latest and biggest casualty is the cryptocurrency exchange FTX, which has filed for bankruptcy. Contagion from the fallout from FTX continues to spread through the market.

The fall in bitcoin’s price will also coincide with a rally in gold, Robertsen said, arguing that the yellow metal could potentially rise 30% to $2,250 an ounce “as cryptocurrencies fall further and more crypto firms succumb to liquidity squeezes and investor withdrawals.”

Robertsen says gold could re-establish itself as a safe haven, with investors flocking to the commodity for stability in times of market volatility.

“The boom in gold in 2023 [also] comes when stocks resume their bear market and the correlation between stock and bond prices shifts back to negative,” he added.

Standard Chartered’s view is not the only bearish view on bitcoin. Veteran investor Mark Mobius told CNBC last week that he sees bitcoin falling to $10,000 in 2023 due to rising interest rates and tighter monetary policy from the US Federal Reserve.

However, there are still those who are bullish on bitcoin. Venture capitalist Tim Draper told CNBC on Saturday that he believes bitcoin could reach $250,000 next year.