Could Bitcoin Crash to $10,000? Market experts weigh in

How Low Can Bitcoin Go?

Market analysts, including the BitMEX founder Arthur Hayes and Mobius Capital Partners co-founder Mark Mobius, said that the next target for Bitcoin is $10,000, which, if the prediction comes true, will inflict more pain on the already suffering industry.

Shockwaves weeks after the collapse of the FTX crypto exchange are still being felt, with lending firm BlockFi the latest victim of the spread on Monday

Other high-profile units, such as Genesis Global and Gemini, also found themselves under increased pressure, fueling concerns of more casualties in the market.

Yet one of the heaviest blows recent events delivered was the shattered confidence in the entire crypto industry. This has naturally had a negative impact on the price of Bitcoin (BTC), which plunged from over $21,000 at the beginning of the month to today’s level of just over $16,000.

But is it really all gloom and doom for the world’s leading cryptocurrency?

“Bitcoin appears to have found a post-FTX collapse support level at around $16,000. That said, we are actively tracking the fallout from FTX – specifically the potential Genesis bankruptcy and further spillovers from it,” said CoinGecko Head of Research Zhong Yang Chan Decrypt.

Another closely watched area, according to Yang Chan, is “a developing situation” with Bitcoin miners selling down their reserves for cash flow.

“On a broader scale, the continued challenging macroeconomic environment, as well as geopolitical conflict in Ukraine, could lead to further volatility for BTC in the near future,” he added.

Juan Pellicer, head of research at IntoTheBlock, appears to be more optimistic, saying that a “rapid drop to the $10,000 to $12,000 level seems extreme unless a very negative catalyst emerges.”

“I think the general feeling is that there is a greater chance of upside than downside, but it may take a long bear market of 12-24 months to renew the confidence of investors and digest the impact that these large bankruptcies are having generally on the sector,” Pellicer told Decrypt.

According to him, “the store of value thesis of Bitcoin is more valid than ever, and long-term Hodlers are taking advantage of this and accumulating at a rapid rate.”

As data provided by IntoTheBlock shows, Bitcoin addresses that have held for more than a year are currently at an all-time high, accounting for a total balance of 13.79 million BTC (roughly $225.8 billion at current prices).

Bitcoin and macroeconomic factors

The current macroeconomic environment is another factor to consider, said Jason Pagoulatos, market analyst at Delphi Digital, although he said he had personally been targeting $9,000 to $12,000 for many months.

“Macro-wise, this is the worst backdrop in over 50 years, combining many of the previous economic crisis factors — inflation, energy, technology values, housing values ​​— into a single year,” Pagoulatos said Decryptadding that there will be no sustained relief in crypto “until the macro tide turns.”

According to Pagoulatos, historically, different cycles can take a long time, and you can’t just “relax 14 years of monetary policy in 12 months.”

“Liquidity rules the world and is the biggest driver of asset prices across the board. Until liquidity conditions recover, it will be tough, he said.

He believes the Federal Reserve, which held the federal funds rate at around zero as recently as the first quarter of 2022 but has raised rates six times since then, is likely to swing away from its tightening policy at some point next year, likely by the end of second quarter.

This will increase liquidity conditions more generally; However, as Pagoulatos warned, “historically, stock markets tend to have the last leg down after a pivot is implemented, before they turn around.”

“Interestingly, the story of 2022 was the inflation story, and 2023, I think, will be the recession story,” had added, pointing to the fact that this year the Fed has been tightening at the fastest pace in history.

According to the Delphi Digital analyst, there is a solid chance that risk assets will have a strong second half of 2023.

The most important question – and a more long-term one – is where inflation will be when this pivot arrives, and whether it will cool once the pivot is implemented.