Stifel’s Chief Equity Strategist and Managing Director Barry Bannister believe that by 2023 bitcoin could lead to a plunge in price to $10,000.
When discussing bitcoin’s price with Business Insider, Bannister said that a tightening of Federal Reserve policy and reducing the balance sheet would negatively impact bitcoin’s value.
Bitcoin Sets Stage For Reversal As Unmoved Supply Nears All-Time High| Bitcoin Sets Stage For Reversal As Unmoved Supply Nears All-Time High
It is strongly linked to global bitcoin cash supply. Therefore, the strategist identified this first essential macro factor and cited that since the S&P 500 moved into the US dollar as its power base, any given Supply/Demand situation will affect BTC value.
It is possible that the US’ financial situation will become tighter if M2, the money supply, slows down. Bannister, Stifel’s managing director, believes that this could lead to a collapse in Bitcoin prices as well as other speculative investments like bonds or stocks. They can also be denominated using loans from banks that have an attached interest rate.
Bannister pointed the Fed’s tightening could stop bitcoin’s growth as a second macro factor. Additionally, the yield on 10-year US Treasury bonds has been rising, so there will be a significant increase in bitcoin’s growth. Bitcoin transactions are slowed down or stopped by overflow.
Bannister claimed
In 2022, we see bitcoin in a broad trading range bounded by year-to-date intra-day levels with greater downside risk in 2023 <…> If the rising 10Y TIPS yield pulls gold lower, that also pressures Bitcoin. Bitcoin could fall to the bottom of its trading range if divided by gold (Fed tightens). Bitcoin may drop as low as $10,000 in 2023.
Lastly, the analyst from Stifel said that the Fed’s decision to tighten would create a lower equity risk premium. The action is good for bitcoin’s growth.
Stifel Predictions Vs. Analysts
Bitcoin could see a correction after the Federal Reserve announced it would ease tightening.
There is a deep dive in the cryptocurrency market, and bitcoin’s value has dropped by almost 9.4% in a week. If Bannister’s projection becomes true, this will be a more than a 75% drop from its current state.
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Analysts predict that bitcoin could crash even more but recover to new highs. As written by InTheMoneyStocks’ chief market strategist, Gareth Soloway, bitcoin’s price is expected to move back up above $17,000 in the coming weeks or months.
Soloway thinks that bitcoin won’t be in such a position for long. Soloway said that this was a result of how digital assets have been affected by deleveraging, and not cryptocurrency in particular.
Yet, it won’t be the first time we will see a low of $10,000. In December 2017, BTC hit its peak at $20,000, and it then entered winter. It plunged 80% before finally recovering.
As interest rates rise and digital assets are more accessible, it is likely that investors will choose to invest in cryptocurrencies. Our report shows that Pantera Capital CEO Dan Morehead, increased stability in USD may lead people towards bitcoin over other coins because it’s more hedged against inflation risk while still being transnational.
Featured image taken from Pixabay. Chart from TradingView.com