A worsening macroeconomic climate and the collapse of industry giants like FTX and Terra have weighed on bitcoin’s price this yr.
STR | Nurphoto via Getty Images
2022 was a rough yr for crypto. Greater than $1.3 trillion was wiped off the worth of the market. And bitcoin, the world’s largest digital coin, saw its price slump greater than 60%.
Investors were caught off guard by a wave of collapses within the industry from stablecoin project terraUSD to crypto exchange FTX, in addition to a worsening macroeconomic climate. Those that made predictions about bitcoin’s price up to now yr really missed the mark.
But with 2023 now here, some market players have stuck their neck out with price calls for what may very well be one other volatile yr.
Rates of interest around the globe are on the rise, and that is weighing on risk assets like stocks and bitcoin. Investors are also watching how the FTX saga, which resulted within the arrest of the corporate’s founder Sam Bankman-Fried within the Bahamas, will develop.
CNBC rounds up a number of the boldest price calls for bitcoin in 2023.
Tim Draper: $250,000
Bitcoin bull Tim Draper had one of the crucial optimistic calls on bitcoin of 2022, predicting the token can be value $250,000 by the top of the yr.
In November, the billionaire enterprise capitalist said he’s extending the timeline for that prediction until mid-2023. Even after the collapse of FTX, he’s convinced the coin will hit the quarter-of-a-million milestone.
“My assumption is that since women control 80% of retail spending, and only one in 7 bitcoin wallets are currently held by women that the dam is about to interrupt,” Draper told CNBC via email.
Bitcoin would want to rally 1,400% to ensure that it to trade at that level.
Despite the depressed prices and trading volumes drying up, there may very well be reason to suspect the market has found a bottom, based on Draper.
“I think that the halvening in 2024 can have a positive run,” he said.
The halvening, or halving, is an event that happens every 4 years wherein bitcoin rewards to miners are cut in half. That is viewed by some investors as positive for bitcoin’s price, because it squeezes supply. The subsequent halving is slated to occur sometime in 2024.
Bitcoin miners, who use power-intensive machines to confirm transactions and mint latest tokens, are being squeezed by the slump in prices and rising energy costs.
These actors accumulate massive piles of digital currency, making them a number of the biggest sellers out there. With miners offloading their holdings to repay debts, that ought to remove a lot of the remaining selling pressure on bitcoin.
That is historically an excellent sign for bitcoin, said Vijay Ayyar, vice chairman of corporate development at crypto exchange Luno.
“In prior down markets, miner capitulation has normally indicated major bottoms,” Ayyar told CNBC. “Their cost to supply becomes greater than the worth of bitcoin, hence you’ve got a variety of miners either switching off their machines … or they should sell more bitcoin to maintain their business afloat.”
“If the market reaches some extent where it’s absorbing this miner sell pressure sufficiently, one can assume that we’re seeing a bottoming period.”
Standard Chartered: $5,000
For some market participants, the worst is yet to return.
In a Dec. 5 research note, Standard Chartered said bitcoin may sink as little as $5,000. The prediction, one in all the bank’s list of “surprises” which are being “under-priced” by markets, would represent a 70% plunge from current prices.
“Yields plunge together with technology shares” in Standard Chartered’s nightmare 2023 scenario, “and while the Bitcoin sell-off decelerates, the damage has been done,” said Eric Robertsen, the bank’s global head of research.
“An increasing number of crypto firms and exchanges find themselves with insufficient liquidity, resulting in further bankruptcies and a collapse in investor confidence in digital assets,” he added.
Robertsen said the scenario has a “non-zero probability of occurring within the yr ahead” and falls “materially outside of the market consensus or our own baseline views.”
Mark Mobius: $10,000
Veteran investor Mark Mobius had a comparatively successful 2022 by way of his price call. In May, he forecast bitcoin would drop to $20,000 when it was trading above $28,000.
He said bitcoin would fall to $10,000 in 2022. That didn’t occur. Nonetheless, Mobius told CNBC that he’s sticking for his $10,000 price call in 2023.
The investor, who made his name at Franklin Templeton Investments, told CNBC that his bear case for bitcoin stemmed from rising rates of interest and general tighter monetary policy from the U.S. Federal Reserve.
“With higher rates of interest, the attraction of holding or buying Bitcoin or other cryptocurrencies becomes less attractive since just holding the coin doesn’t pay interest,” Mobius said via email.
Carol Alexander: $50,000
Carol Alexander, professor of finance at Sussex University, wasn’t far off the mark together with her prediction that bitcoin would slip to $10,000 in 2022.
Now, she thinks the cryptocurrency may very well be set for gains — but not for reasons you would possibly expect.
The catalyst can be more dominos from the FTX fallout tipping over, Alexander said. If this happens, she expects the worth of bitcoin will top $30,000 in the primary quarter, after which $50,000 by quarters three or 4.
“There might be a managed bull market in 2023, not a bubble — so we can’t see the worth overshooting as before,” she told CNBC.
“We’ll see a month or two of stable trending prices interspersed with range-bounded periods and possibly a few short-lived crashes.”
Alexander’s reasoning is that, with trading volumes evaporating with traders on edge, large holders referred to as “whales” will likely step in to prop up the market. The wealthiest 97 bitcoin wallet addresses account for 14.15% of the full supply, based on fintech firm River Financial.
Some investors have given up attempting to predict the worth of bitcoin. For Antoni Trenchev, CEO of crypto lending platform Nexo, the recent events are a sobering moment.
Bitcoin was on a “positive path” earlier in 2022, with institutional adoption rising, but “a number of major forces interfered,” he said.
Trenchev once predicted bitcoin surging to a peak of $100,000 by early 2023. Now, he’s done attempting to predict the worth.
Laith Khalaf, financial analyst at AJ Bell, suggested attempts to forecast bitcoin’s price are futile.
“We may very well be sitting here talking this time next yr and it may very well be at $5,000 or 50,000 it just would not surprise me since the market is so heavily driven by sentiment,” he told CNBC’s “Squawk Box Europe.”
