Analysts from Deutsche Bank predict Bitcoin (BTC) rebounding to $28,000 by December 2022 as the cryptocurrency market continues to grapple with gloomy times. They estimate a 30% recovery for Bitcoin by December driven by correlation to S&P 500.
Bitcoin and the broader cryptocurrency markets have tolerated a tough six months, with the value of BTC, in specific, enduring its worst quarter in years. Macroeconomic circumstances around the world have played a role, with stagnating markets and fears of inflation driving conventional stock markets and their crypto-counterparts down to painful lows.
A report from Deutsche Bank analysts Marion Laboure and Galina Pozdnyakova delivers an interesting perspective on the medium-term outlook for BTC. Their intuitions suggest that cryptocurrency markets have reflected movements of the Nasdaq 100 and S&P 500 since late 2021.
The pair are confident that the S&P will reflect to its January levels and that Bitcoin’s association to the index could result in a 30% growth in value from current levels halfway through 2022. This would see BTC back up to the $28,000 mark.
The forecast may suppress some of the fear and uncertainty spinning in space, but the recovery of cryptocurrency markets is not so clear-cut. Labor and Pozdnyakova highlighted the recent collapse of the Terra ecosystem and the Celsius disaster and their influence on markets as intensifying factors.
Another investor message from JPMorgan recommends that the crypto ecosystem may by now be in recovery. While firms like hedge fund Three Arrows Capital became insolvent after failing to meet margin calls from investors amid the crypto market crash, other industry players have supported the ecosystem:
“The current deleveraging cycle may not be very protracted given the fact that crypto entities with the stronger balance sheets are currently stepping in to help contain contagion and that venture-capital funding, an important source of capital for the crypto ecosystem, continued at a healthy pace in May and June.”
The note also highlighted the comparatively healthy amount of venture capital investment into cryptocurrency firms over the past two months — to the tune of $5 billion. This signifies a $3.4 billion increase from the same period in 2021.
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