Experts warn that Bitcoin could plunge to $5,000 in 2023
The price of the cryptocurrency has fallen dramatically during 2022 and Standard Chartered Bank suggest that it could go lower.
This price of Bitcoin soared during the pandemic, hitting an all-time high of $69,044.77 on 10 November 2021. Since that point the cryptocurrency’s price has been on a steady decline, falling to just over $17,000 on Monday.
However financial experts at Standard Chartered Bank has claimed that the price could fall even further. A note entitled “The financial-market surprises of 2023,” released on Sunday, claimed that the cryptocurrency could suffer after a tumultuous year.
Eric Robertsen, global head of research at Standard Chartered Bank, said of cryptocurrency markets: “Yields plunge along with technology shares, and while the Bitcoin sell-off decelerates, the damage has been done.”
“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,” he added.
He claimed that Bitcoin’s price could continue to fall to around $5,000 in 2023, which would represent a 70% drop on its current valuation.
What is causing Bitcoin’s value to fall?
The fall from a peak of $69,000 has the air of a market readjustment, coming after an unprecedented flow of new money into cryptocurrencies. The pandemic sparked a rush of home investors who had time on their hands and unused disposable income.
That pushed up prices, for Bitcoin in particular, which in turn created a fear of missing out on a lucrative opportunity. As the most well-known coin, and often the one which investors used to buy other cryptocurrencies, Bitcoin soared in value.
Once those conditions had been removed the drop-off in value was severe and it likely spooked a more investors into selling.
That general downward trend was exacerbated by the recent collapse of cryptocurrency exchange FTX, which was one of the largest marketplaces for the digital coins. The site was handling around $1 billion of transactions a day before it went to the wall and that has severely hampered the market.
The most telling impact of the FTX failure could well be the damage it does to the reputation of cryptocurrency more broadly. The exchange was a major player in the world of crypto and its founder, Sam Bankman-Fried, was billed as the youngest self-made billionaire.
He is now under investigation by federal prosecutors on market manipulation charges and millions of FTX users are out of pocket. The affair will likely stain the reputation of cryptocurrency for years to come and could prevent Bitcoin ever reaching its 2021 peak again.