How Low Can Bitcoin Go?
Market analysts, including the co-founder of BitMEX Arthur Hayes and Mark Mobius, co-founder of Mobius Capital Partners, said that the next target for Bitcoin is $10,000, and if the prediction comes true, it will cause more pain to the already suffering industry.
Weeks after the collapse of cryptocurrency exchange FTX, the shockwaves are still being felt, with lending firm BlockFi becoming the latest victim of the contagion that spread on Monday
Other high-profile institutions such as Genesis Global and Gemini have also come under increasing pressure, raising concerns about further losses in the market.
Still, one of the hardest hits of recent events has been the erosion of confidence in the entire cryptocurrency industry. This naturally had a negative impact on the price of Bitcoin (BTC), which fell from $21,000 at the beginning of the month to just above $16,000 today.
But is it really all gloom and doom for the world’s leading cryptocurrency?
“Bitcoin seems to have found a support level around $16,000 after the collapse of FTX. However, we are actively monitoring the outcome of FTX, particularly the potential bankruptcy of Genesis and further ripple effects,” said Zhong Yang Chan, head of research at CoinGecko. Open the password.
According to Yang Chan, another area being watched closely is the “evolving situation” of Bitcoin miners selling their reserves for cash flow.
“The continued difficult macroeconomic environment on a broader scale, as well as the geopolitical conflict in Ukraine, could lead to further volatility for BTC in the near term,” he added.
Juan Pellicer, head of research at IntoTheBlock, seems more optimistic, saying “unless a very negative catalyst emerges, a rapid decline to $10,000-$12,000 seems overdone.”
“I believe the general sentiment is that there is more upside than downside, but a long bear market of 12 to 24 months may be needed for investors to renew confidence and digest the impact of these major bankruptcies on the sector as a whole,” Pelliser said. Open the password.
According to him, “Bitcoin’s store of value thesis is more valid than ever, and long-term Hodlers are taking advantage of this and accumulating rapidly.”
According to data provided by IntoTheBlock, bitcoin addresses that have been around for more than a year are currently at an all-time high, with a total balance of 13.79 million BTC (about $225.8 billion at current prices).
Bitcoin and macroeconomic factors
The current macroeconomic environment is another factor to consider, though Jason Pagoulatos, a market analyst at Delphi Digital, says he’s personally targeting the $9,000-$12,000 range within a few months.
“Macro-wise, this is the worst fund in the last 50 years, combining many of the previous economic crisis factors — inflation, energy, tech values, home values – into one year,” Pagulatos said. Open the passwordadding that there will be no sustained relief in crypto “until the macro tides reverse.”
According to Pagulatos, different cycles can take a long time historically, and you can’t just “unload 14 years of monetary policy in 12 months.”
“Liquidity rules the world and is the biggest driver of asset prices around the world. It will be difficult until liquidity conditions are restored.”
He believes the Federal Reserve, which kept the federal funds rate close to zero in the first quarter of 2022 but has raised interest rates six times since then, is likely to move away from tightening next year. the end of the second quarter.
This will increase liquidity conditions more generally; but, as Pagoulatos warns, “stock markets historically tend to take a last leg down after a reversal is made, before turning back around.”
“It’s interesting that the story of 2022 was an inflation story, and 2023 will be a recession story,” he added, pointing to the Fed’s fastest tightening this year on record.
Risky assets are likely to have a strong second half of 2023, according to analyst Delphi Digital.
The more important issue – and the longer term – is where inflation will be when the pivot comes, and whether it will cool off once the pivot is implemented.
The views and opinions expressed by the author are for informational purposes only and do not constitute financial, investment or other advice.