By December, analysts at Deutsche Bank predict a 30 percent recovery for Bitcoin, driven by its link to the S&P 500.
In December 2022, according to analysts at Deutsche Bank, Bitcoin (BTC) will recover to $28,000 as the cryptocurrency sector continues to face challenging conditions.
A difficult six months have been experienced by Bitcoin and the larger cryptocurrency markets, with the value of BTC in particular experiencing its worst quarter in ten years. Global macroeconomic conditions have contributed, with stagnant markets and worries about inflation driving traditional stock markets and their cryptocurrency counterparts to painful lows.
Regarding the medium-term forecast for BTC, a research by Deutsche Bank analysts Marion Laboure and Galina Pozdnyakova offers an intriguing viewpoint. Their findings imply that since late 2021, the Nasdaq 100 and S&P 500 have moved in tandem with the cryptocurrency markets.
The two predict that the S&P will rise to its levels from January and that, due to Bitcoin’s correlation to the index, its value would rise by 30% from present levels by the middle of 2022. BTC would then rise once again to the $28,000 level.
The projection might lessen some of the angst and doubt currently permeating the market, but it’s not entirely clear how quickly bitcoin prices will rebound. The recent demise of the Terra ecosystem, the Celsius scandal, and their impact on markets were singled out by Laboure and Pozdnyakova as aggravating factors:
“Stabilizing token prices is hard because there are no common valuation models like those within the public equity system. In addition, the crypto market is highly fragmented. The crypto freefall could continue because of the system’s complexity.”
According to a different investor note from JPMorgan, the cryptocurrency ecosystem may already be recovering. While businesses like hedge fund Three Arrows Capital went bankrupt after failing to pay investor margin calls after the cryptocurrency market meltdown, other participants in the sector have supported the ecosystem:
“The current deleveraging cycle may not be very protracted given the fact that crypto entities with the stronger balance sheets are currently stepping in to help contain contagion and that venture-capital funding, an important source of capital for the crypto ecosystem, continued at a healthy pace in May and June.”
The statement also emphasized the $5 billion in relatively robust venture capital investments made into cryptocurrency businesses over the previous two months. This is an increase of $3.4 billion from the same time in 2021.
