Bitcoin could more than double and hit a new record next year

• Bitcoin could hit a new record high next year, said Bob Ras, co-founder of blockchain firm Sologenic.
• He cited bitcoin halving, which will reduce mining rewards and token supply.
• The banking crisis and expectations that the Fed will start easing could also lift bitcoin, he added.

Bitcoin has risen more than 74% to start 2023, but the world’s most popular token by market capitalization could more than double by next year, according to Bob Ras, co-founder of blockchain firm Sologenic.

An important catalyst will be the halving process, which is when the reward for miners is halved. It is intended to cut the supply of tokens and has historically triggered price increases.

“When the bitcoin halving starts a year from now, we will likely be well past the previous all-time high,” Ras told Insider.

That would mean bitcoin hovering past the $67,000 level reached in November 2021, up from around $29,000 on Friday.

Meanwhile, bitcoin appears to be driving the belief that looser policy from the Federal Reserve is on the way, Ras explained.

The Fed raised interest rates for the 10th time in a row on Wednesday, but Wall Street widely expects it to be the last increase in this tightening cycle.

He believes the token’s rally points to a future that is effectively a return to lower prices and more quantitative easing.

Technical indicators, such as long-term moving averages, suggest upside and momentum, he said, but it is the broader landscape that will determine performance for the rest of the year. And he wouldn’t be surprised if bitcoin hits $40,000 by the end of 2023.

“Linked with signs of decline [economic] growth, the changing macro picture points to a Fed that will likely soon have to cut interest rates and inject a lot of liquidity into the market,” Ras said. “If the Fed doesn’t do this, we could face a severe contraction, punctuated by a possible credit crunch. Either way, all roads seem to lead to looser monetary policy sooner rather than later.”

Ras is not alone in his bullishness. Standard Chartered published a recent note saying that bitcoin could rise to $100,000 by the middle of next year, and Matrixport predicted that bitcoin could more than double to around $65,000 by next April.

A hedge against financial turmoil

As the banking crisis that began with Silicon Valley Bank in March continues to stoke fears of contagion, more private and institutional investors have turned to bitcoin as a hedge, Ras said.

That turmoil resurfaced in the past week when regulators seized First Republic on Monday and sold the bulk of its assets to JPMorgan, triggering the sale of regional banks PacWest Bancorp and Western Alliance.

“The banking crisis helped cement the narrative that bitcoin serves as a key store of value that lacks the kind of counterparty risk of holding funds in the form of bank deposits,” Ras said. “Bitcoin offers protection in the form of decentralization, self-storage and a network that has never been hacked.”

But a credit crunch poses the biggest downside risk to bitcoin, he said. In such a scenario, both bitcoin and gold, another traditional safe-haven investment, could see a sharp drop in value.

“I’m not sure such a scenario would happen,” Ras said, “but it is possible and would trigger a huge amount of volatility not just for bitcoin, but all markets.”