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Bitcoin still has room to fall – Industry Survey

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Bitcoin [BTC], the flag-bearer cryptocurrency, has had a torrid 2022, but there’s still further room to fall, and it could go as low as USD12,000, according to research from Finder, a financial services comparison platform.

Finder canvassed 53 cryptocurrency specialists for its Bitcoin Price Predictions report and the consensus was BTC would hit USD13,676 before showing a bit of late-year recovery to close out December at around USD25,500.

However, some of the analysts were even more bearish on the coin’s prospects, with Martin Froehler, chief executive of Morpher, a trading platform on the Ethereum blockchain, being the most pessimistic. He believed Bitcoin would fall as low as USD12,000, before rallying to USD40,000 by year-end.

Froehler said: “It’s reasonable to expect to see more big projects fail in the next couple of months. Retail sentiment is at historic lows due to global economic uncertainty and inflation. Highly leveraged miners, who just had to digest the China exodus, will capitulate and increase the downside pressure even more. We will see even lower Bitcoin prices.”

Now is the Winter of Discontent

Bitcoin is seen by some as a bellwether of the wider economic market. Seventy-seven percent of the analysts canvassed said that the market is in a ‘crypto winter’. Disappointing performance and low confidence in cryptocurrencies are being driven by wider pessimism at the state of the global economy.

The key downside driver, Finder found, was interest rate rises. Another trigger was Terra Luna’s collapse, with 68% of respondents blaming the failure of the so-called crypto stablecoin as lighting the tinder of the crypto fire. Other influences included the tightening of central bank balance sheets (47%) and rising inflation (40%).

Despite the pessimism, the survey found causes for optimism. The market will recover – but how long the crypto winter will last was a moot point. Nearly one-third (29%) of analysts though there would be a market recovery in 2022. But the vast majority (46%) thought the crypto-bear would rumble on to next year, with about a quarter (24%) saying that it would take until 2024 to recover.

“Bitcoin will likely bounce back in 2023 which may lead to inflated expectations and further instability. Much of course depends on world events such as the war in Ukraine and its own ongoing impact on global confidence,” according to Paul Levy, senior lecturer for the School of Business and Law at the University of Brighton.

Draining confidence

Finder discovered that sentiment had rapidly turned against Bitcoin over 2Q22. In its last survey in April 2022, the same experts were predicting BTC would be worth USD179,280 by 2025 and USD420,240 by 2030. In the latest survey, consensus was that BTC will be worth USD106,757 by 2025 and USD314,314 by 2030 – representing a drop of 40% and 25% respectively.

As for 2022 predictions, the divergence between then and now was 61%, with analyst consensus in April for BTC at year-end 2022 being USD61,185.

“A myriad of negative forces has crushed the strength of bitcoin…further tightening and unwinding of bad crypto debts will create sobering times onwards, and investors should buckle up for more difficulty,” said Vetle Lunde, a crypto and derivatives analyst for Arcane Research.

That said, unsurprisingly, the crypto panel still believes Bitcoin’s long term overall momentum is a one-way ticket, predicting longer-term prices well in excess of BTC’s all-time high of USD70,000. Half of the respondents see this as an amazing opportunity to buy more Bitcoin. Only 10% of them recommended selling.

A rare voice in the crowd was Carol Alexander, professor of finance for the University of Sussex, who thought BTC would ultimately shrink in value. She said: “Unlike many other established crypto assets, bitcoin is purely speculative. It has no utility value for the development of Web 3.0.”

The analysts strongly pushed the dual and contradicting narrative on a 42%:42% basis that BTC is both a risk asset and a store of value.

Ben Ritchie, managing director of Digital Capital Management argued Bitcoin is a store of value and will be worth USD200,000 by 2025 and USD400,000 by 2030. He said bitcoin can be used as an inflation hedge but on a much longer time scale than gold or other asset classes.

Conversely ByteTree’s chief investment officer, Charles Morris thinks bitcoin is a risk asset but still thinks BTC will be worth USD250,000 by 2030.

He said: “Bitcoin is almost a pure risk asset, almost opposite to gold which is long-term risk free.”

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This article does not constitute investment advice. Do your own research or consult a professional advisor.

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