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11 Dec, 2022 06:07

Bitcoin may have nasty ‘surprise’ in store for investors – media

The top cryptocurrency could plunge 70% next year from the fallout of the FTX exchange collapse, Standard Chartered warns
Bitcoin may have nasty ‘surprise’ in store for investors – media

The price of Bitcoin could drop to as low as $5,000 next year in a market surprise for investors, multinational bank Standard Chartered said, as cited by Decrypt, a website that covers cryptocurrency.

The prediction was made as part of an annual list of possible scenarios that the UK-based banking group believes the markets could be overlooking.

“Yields plunge along with technology shares, and while the Bitcoin sell-off decelerates, the damage has been done,” Eric Robertsen, global head of research at Standard Chartered, said in a note to clients seen by the media. “More and more crypto firms and exchanges find themselves with insufficient liquidity, leading to further bankruptcies and a collapse in investor confidence in digital assets.”

The analyst noted that somewhat extreme scenarios “have a non-zero probability of occurring in the year ahead, and ... fall materially outside of the market consensus or our own baseline views.”

The drop in Bitcoin’s price could coincide with a rally in gold, Robertsen said – potentially by 30% to $2,250 per ounce – “as cryptocurrencies fall further and more crypto firms succumb to liquidity squeezes and investor withdrawals.”

The Standard Charted analyst said that gold could re-establish itself as a safe haven, with investors flocking to the commodity for stability in times of market volatility.

Bitcoin has already nosedived more than 60% this year after a string of high-profile collapses in the cryptocurrency space, and particularly the bankruptcy of major crypto exchange FTX. Contagion from the fallout of FTX has been spreading through the market lately, denting investor confidence in crypto.

On Wednesday, Bitcoin was trading at around $16,800 per coin.

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