Deutsche Bank analysts predict Bitcoin (BTC), to rebound to $28,000 by December 2022, as the cryptocurrency market continues to struggle with dark times.
The cryptocurrency and Bitcoin markets have had a difficult six months. BTC’s value has seen its lowest quarter in 10 years. Global macroeconomic conditions have played a part in slowing markets and fear of inflation driving both conventional stock markets down and crypto-counterparts to their lowest levels.
The medium-term outlook for Bitcoin is interestingly outlined in a report by Deutsche Bank analysts Marion Laboure, and Galina Pozdnyakova. They found that cryptocurrency markets have mirrored the movements of the Nasdaq 100 & S&P 500 since late-2021.
According to the pair, the S&P will return to January levels. Bitcoin’s correlation with the index could lead to a 30% rise in value midway through 2022. BTC would then reach the $28,000 mark.
Related: The end of crypto deleveraging is coming to an abrupt halt — JPMorgan
Although the prediction might calm some fear and uncertainty in the space, it does not guarantee that cryptocurrency markets will recover. Laboure and Pozdnyakova cited the recent collapse in the Terra ecosystem, the Celsius debacle, and their impact on markets as aggravating factors.
Stabilizing token prices can be difficult because there is no standard valuation model like the one used in the public equity system. The crypto market is also highly fragmented. Due to the complexity of the system, crypto could continue its slide.”
JPMorgan has issued a separate note to investors suggesting that the crypto market may be on its way to recovery. While Three Arrows Capital, a hedge fund, was unable to meet the margin demands of investors during the crypto market crash and became bankrupt, other players in the industry have helped to prop up the ecosystem.
“The current deleveraging cycle might not last very long given that crypto entities that have stronger balance sheets are currently stepping up to contain contagion. Venture-capital financing, which is an important source capital for the crypto ecosystem, also continued at a healthy rate in May and June.”
This note also noted the healthy amount of venture capital investments in cryptocurrency firms over two months, to the tune $5 billion. This is $3.4 billion more than the 2021 period.