Bitcoin Will Reach $5000 Next Year Says StanChart – Is It Realistic?
A report from Standard Chartered bank says markets are underpricing a sharp fall in Bitcoin, but blockchain-based digital assets look unlikely to disappear.
A note from British financial firm Standard Chartered outlined several “surprise scenarios”, saying markets are currently “underpriced”. They include a roughly 70% drop in Bitcoin’s value to $5,000, according to Global Research Head of Research Eric Robertsen.
Bitcoin surprise price scenario
The biggest cryptocurrency is already down 63% year-to-date from a record high of $69,000 last November. The note notes that “while Bitcoin sales are slowing, the damage is done.”
The drop in prices triggered subsequent insolvency crises among crypto firms, further weakening investor confidence in the sector. This vicious cycle caused Bitcoin’s price to continue to fall, as the contagion spread and more companies went bankrupt.
Although underpriced by the market, the note still characterizes this as a “surprise scenario”. First, it says this would involve a reversal of the Federal Reserve’s aggressive monetary policy tightening.
While recent comments from the Fed indicate that it may slow rate hikes, it is still likely to continue. Robertson described these as “surprise scenarios” because they “fall significantly outside market consensus or our own fundamental views.”
Blockchain-based assets here to stay
In addition to Standard Chartered describing Bitcoin’s fall as unlikely, there are other indicators that blockchain-based digital assets have long-term viability. Ironically, they may have been bolstered by the recent collapse of crypto exchange FTX and the subsequent regulatory scrutiny.
JPMorgan said as much in a recent market report, describing accelerated regulatory attention as the “silver lining” to the incident. The report highlights rapid regulations following the 2008 global financial crisis, and said the FTX collapse would trigger something similar. Once this happened, clarity from the reform would inspire more financial institutions to adopt blockchain technology.
Others also shared this perspective of more mainstream adoption of cryptoassets in the wake of sweeping reform. MicroStrategy founder and Bitcoin enthusiast Michael Saylor said more regulation after the FTX collapse would help the industry “grow up.”
Meanwhile, the Bank of England also praised the potential of blockchain-based financial innovations. However, it said more extensive regulation would be needed before this could be achieved.
In fact, JPMorgan is so confident in adopting blockchain-based technology that it has established a dedicated department called “Onyx.” Recently, the investment bank launched its first decentralized finance transaction in partnership with the Monetary Authority of Singapore.
Rival investment bank Goldman Sachs has also acquired crypto firms at a discount in the wake of the FTX collapse.
