Bitcoin Could Fall to $5,000, Standard Chartered Predicts

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Standard Chartered predicts bitcoin could fall to $5,000 in 2023 as part of its research into potential market surprises next year.

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According to Standard Chartered, bitcoin could drop to $5,000 next year in a market surprise that investors are undervaluing.

If this level is reached, it would mark a drop of around 70% from Monday’s price of just over $17,000 for one bitcoin.

In a note titled “Financial Market Surprises in 2023”, Standard Chartered outlined a number of possible scenarios which “we believe are undervalued by markets”.

“Yields plunge with tech stocks, and as Bitcoin selling slows, the damage is done. More companies and crypto exchanges find themselves with insufficient liquidity, leading to further bankruptcies and a collapse investor confidence in digital assets,” Eric Robertsen, global head of research at Standard Chartered Bank, said in the note on Sunday.

Robertsen said that the somewhat extreme scenarios “have a non-zero probability of occurring over the next year, and … fall significantly outside the market consensus or our own baseline views.”

Bitcoin has already fallen more than 60% this year after a series of high-profile project and corporate collapses plagued the industry. The latest and greatest casualty is cryptocurrency exchange FTX which has filed for bankruptcy. The contagion of FTX fallout continues to ripple through the market.

Bitcoin’s price drop will also coincide with a rally in gold, Robertsen said, saying the yellow metal could potentially rise 30% to $2,250 an ounce “as cryptocurrencies fall further and more more and more crypto businesses are succumbing to liquidity restrictions and investor withdrawals.”

Robertsen says gold could once again become a safe haven, with investors flocking to the commodity for stability amid market volatility.

“The resurgence of gold in 2023 [also] comes as equities resume their bear market and the correlation between stock and bond prices turns negative again,” he added.

Standard Chartered’s view is not the only bearish outlook on bitcoin. Veteran investor Mark Mobius told CNBC last week that he sees bitcoin falling to $10,000 in 2023 due to rising interest rates and tightening monetary policy by the US Federal Reserve.

However, there are still those who are bullish on bitcoin. Venture capitalist Tim Draper told CNBC on Saturday that he believes bitcoin could hit $250,000 next year.

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