Forex in this article
• 2022 crypto market marked by scandals and price crashes
• VanEck: Bitcoin set to drop further in 2023 – wave of insolvencies among crypto miners expected
• Fund manager expects recovery in second half of the year
2022 is likely to be remembered negatively by crypto investors. The year was marked by scandals – like the debacle surrounding crypto lenders Celsius and Voyager, hedge fund Three Arrow Capital and digital token Terra/LUNA and the bankruptcy of crypto exchange FTX – and drops in price. Last year, the most popular and largest cryptocurrency by market capitalization, Bitcoin, lost around 65% of its value. According to a fund manager, Bitcoin may initially decline further in 2023 – but then there should be a recovery.
Bitcoin is expected to decline further initially in 2023
Despite the slowdown in inflation and the tightening of the Monetary Policy by the US Federal Reserve, investment manager VanEck initially remains pessimistic about Bitcoin. Matthew Sigel, head of digital asset research at VanEck, wrote in a 2023 Crypto Outlook that he believes a wave of bankruptcies among crypto miners caught between rising operating costs and the Bitcoin’s 2022 price decline was increasing selling pressure on bitcoin and “should mark the bottom of the crypto winter,” CoinDesk reports. “The median market capitalization of the MVIS Global Digital Assets Mining Index is now only 180 [Millionen] US dollars, with almost all constituents burning silver and trading well below book value. With bitcoin mining being largely unprofitable given the recent rise in electricity prices and falling bitcoin prices, we expect many miners to restructure or merge,” CoinDesk said quoting Sigel.
According to Sigel, the Bitcoin price should therefore fall back in the direction of USD 10,000 to USD 12,000 in the first quarter of 2023. This would be down more than 80% from its all-time high of around USD 69,000 set in November 2021. From its current price of US$16,731.85 (as of January 2, 2023), Bitcoin could still drop around 28-40% at the mentioned marks.
A recovery is expected in the second half
However, after that, Sigel expects a rebound for the oldest and largest cryptocurrency by market capitalization, according to CoinDesk. In the second half of the year, according to the fund manager, bitcoin could rise to $30,000 – a rise of around 79% from the current price – as “lower inflation, easing energy concerns, a possible ceasefire in Ukraine and a trend reversal in “M2 supply” would fuel the start of a new bull market, according to Sigel, who also notes that an oil-exporting country would add the cryptocurrency to its sovereign fund.
According to Sigel, one of the reasons for Bitcoin’s poor response to rate hikes is that “the policy response to higher inflation in developed markets has been to try to cap energy prices, extend sanctions and to micromanage economic activity to facilitate the energy transition”. reports cryptoglobe.com. However: “If our recession expectations materialized, the US Federal Reserve would likely suspend rate hikes in the face of slowing inflation while money printing and government budget deficits continued. The sheer lack of bad news specific to crypto in the above scenario could cause the price of Bitcoin to bounce back up to $30,000,” the fund manager said.
More VanEck Crypto Predictions
Along with this, as CoinDesk reports, VanEck predicts that financial institutions will mark over $10 billion in off-chain assets and a new decentralized stablecoin will reach $1 billion in market capitalization. The investment manager also expects Brazil to become one of the most crypto-friendly countries in the world and to tokenize some of the government bond offerings on the blockchain. Additionally, according to VanEck, Ripple is expected to lose the lawsuit against the Securities and Exchange Commission (SEC) in the United States and Ethereum will allow withdrawals from the Beacon Chain in the future.
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