Market analysts, including the co-founder of BitMEX Arthur Hayes and Mobius Capital Partners co-founder Mark Mobius, said the next target for Bitcoin is $10,000, which, if the prediction comes true, would inflict more pain on the already struggling industry.
Shockwaves weeks after the collapse of crypto exchange FTX are still being felt, with lending firm BlockFi the latest victim of the spreading contagion on Monday
Other high-profile entities, such as Genesis Global and Gemini, have also found themselves under increased pressure, fueling fears of more market casualties.
Yet one of the biggest blows of recent events has been the shattered trust across the crypto industry as a whole. This naturally had a negative impact on the price of Bitcoin (BTC), which plunged from over $21,000 at the start of the month to the current level just above $16,000.
But is it really dark and catastrophic for the world’s leading cryptocurrency?
“Bitcoin appears to have found a level of support following FTX’s collapse at around $16,000. That said, we are actively monitoring the fallout from FTX, particularly the potential bankruptcy of Genesis and other ripple effects that may arise” , said Head of Research Zhong Yang Chan at CoinGecko. Decrypt.
Another closely watched area, according to Yang Chan, is “a developing situation” where Bitcoin miners are selling their reserves for cash flow.
“On a larger scale, the still difficult macroeconomic environment, as well as the geopolitical conflict in Ukraine, could lead to additional volatility for BTC in the near future,” he added.
Juan Pellicer, head of research at IntoTheBlock, seems more optimistic, saying that a “rapid drop to the $10,000-$12,000 level seems extreme unless a very negative catalyst emerges.”
“I believe the general sentiment is that there is more upside than downside, but it could take a long bear market of 12 to 24 months to renew confidence in investors and digest the impact that these large bankruptcies have globally affected the sector,” Pellicer said Decrypt.
According to him, “Bitcoin’s store of value thesis is more valid than ever, and long-term Hodlers are taking advantage of it, accumulating at a rapid rate.”
As data provided by IntoTheBlock shows, Bitcoin addresses held for more than a year are currently at an all-time high, representing a total balance of 13.79 million BTC (about $225.8 billion in current prices).
Bitcoin and macroeconomic factors
The current macro environment is another factor to consider, said Jason Pagoulatos, market analyst at Delphi Digital, although he said he personally targeted the $9,000-$12,000 range for many months.
“Macroeconomically, this is the worst backdrop for over 50 years, combining many factors from previous economic crises – inflation, energy, tech stocks, home values – in a single year,” Pagoulatos said. Decryptadding that there will be no lasting crypto relief “until the macro tides turn.”
According to Pagoulatos, different cycles can historically take time, and you can’t just “unwind 14 years of monetary policy in 12 months.”
“Liquidity rules the world and is the main driver of asset prices at all levels. Until liquidity conditions recover, it will be difficult,” he said.
He believes that the Federal Reserve, which kept the federal funds rate at around zero as recently as the first quarter of 2022 but has raised interest rates six times since then, should move away from its policy of tightening to one. sometime next year, probably by the end of the second quarter.
This would strengthen liquidity conditions more generally; however, as Pagoulatos warned, “Historically, stock markets tend to have their last leg down after a pivot is implemented, before reversing.”
“Interestingly, the story of 2022 was the story of inflation, and 2023, I think, will be the story of recession,” he added, pointing to the fact that this year the Fed is is tightened at the fastest pace in history.
Chances are high that risk assets will have a strong second half of 2023, according to the Delphi Digital analyst.
The more important – and longer-term – question is where inflation will be when this pivot arrives and whether it will cool 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.
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