Bitcoin drops another 70% in Standard Chartered List of possible 2023 upheavals
(Bloomberg) — Speculators clinging to the view that the crypto rout is largely over risk a rude awakening in 2023, according to Standard Chartered.
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A further Bitcoin drop of about 70% to $5,000 next year is among the “surprise scenarios” that markets could be “underpriced,” the bank’s global head of research Eric Robertsen wrote in a note on Sunday.
Demand could switch from Bitcoin as a digital version of gold to the real commodity, spurring a 30% rally in the yellow metal, Robertsen also said.
This possible outcome involves a reversal of rate hikes as economies struggle and more crypto “bankruptcies and collapses in investor confidence in digital assets,” Robertsen added.
He emphasized that he was not making predictions, but instead conjuring up scenarios that are significantly outside the current market consensus.
The question of what lies ahead for digital assets has arguably never been more difficult to answer following the collapse of Sam Bankman-Fried’s FTX exchange and sister trading house Alameda Research. The tremors spreading from the explosion threaten to topple several crypto companies and buffet token prices.
For some, much of the bad news can already be reflected in a fall of over 60% in Bitcoin and a measurement of the top 100 tokens over the past year.
“Our starting point is that most of the foreclosures are over, but investors may not be compensated for the market risk incurred in the immediate term,” Sean Farrell, head of digital asset strategy at Fundstrat, wrote in a note on Friday.
Farrell pointed to ongoing uncertainty surrounding Digital Currency Group, the parent company of embattled crypto brokerage Genesis. Creditors of Genesis are seeking alternatives to try to prevent the brokerage from going bankrupt.
Gold Outlook
Standard Chartered’s Robertsen said the surprising market scenario of gold rising as crypto retreats could see the precious metal scale $2,250 an ounce.
“Gold will benefit from the problems in crypto going forward, with the sudden drop in confidence in the crypto ecosystem,” said Nicholas Frappell, global head of institutional markets at ABC Refinery in Sydney.
The crypto sector continues to shrink. For example, Bybit plans to cut its workforce by 30%, the latest in a series of redundancies that have hit the industry.
More pain may lie ahead: About 94% of respondents to Bloomberg’s MLIV Pulse survey believe further explosions will follow the bankruptcy of FTX as years of easy credit give way to a tougher business and market environment.
Bitcoin is currently quite stable. The biggest virtual coin rose as much as 1.8% on Monday to trade at a three-week high of around $17,340 at 2:35 pm in Tokyo. Tokens like Ether, Solana and Polkadot also got.
For crypto market prices: CRYP; for the best crypto news: TOP CRYPTO.
–With help from Sing Yee Ong.
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