Deutsche Bank analysts see Bitcoin recovering to $28K by December
Deutsche Bank analysts predicted that Bitcoin (BTC) will return to $28,000 by December 2022, as the cryptocurrency market continues to struggle with gloomy times.
Bitcoin and the broader cryptocurrency markets have endured a tough six months, with the value of BTC, in particular, enduring its worst quarter in 10 years. Macroeconomic conditions around the world have played a role, with stagnant markets and fears of inflation driving conventional stock markets and their crypto counterparts to painful lows.
A report by Deutsche Bank analysts Marion Laboure and Galina Pozdnyakova provides an interesting perspective on the medium-term outlook for BTC. Their insights suggest that cryptocurrency markets have mirrored the movements of the Nasdaq 100 and S&P 500 since late 2021.
The pair believes that the S&P will return to its January levels and that Bitcoin’s correlation to the index could result in a 30% increase in value from current levels by mid-2022. This would see BTC return to the $28,000 mark.
Related: Better Days Ahead With Crypto Decline Coming To An End – JPMorgan
The prediction may quell some of the fear and uncertainty swirling in the space, but the recovery of the cryptocurrency markets is not so clear. Laboure and Pozdnyakova highlighted the recent collapse of the original Terra (LUNA) – now officially Terra Classic (LUNC) – ecosystem and the Celsius debacle and their influence on the markets as aggravating factors:
“Stabilizing token prices is difficult because there are no common valuation models like those within the public equity system. In addition, the crypto market is highly fragmented. Crypto freefall may continue due to the complexity of the system.”
A separate investor note from JPMorgan suggests that the crypto ecosystem may already be on the mend. While firms such as hedge fund Three Arrows Capital became insolvent after failing to meet margin calls from investors amid the crypto market crash, other industry players have propped up the ecosystem:
“The current payback cycle may not be very long given the fact that crypto entities with the stronger balance sheets are currently stepping in to help limit contagion and that venture capital funding, a major source of capital for the crypto ecosystem, continued at a healthy pace in May and June.”
The note also highlighted the relatively healthy amount of venture capital investment in cryptocurrency firms over the past two months – to the tune of $5 billion. This represents an increase of $3.4 billion from the same period in 2021.