Deutsche Bank analysts said that Bitcoin would rebound to reach $28,000 by December 2022 as the crypto market continues to grapple with gloomy times. The analysts project a 30% recovery for Bitcoin by December pushed by its correlation with S&P 500.
Bitcoin and the general crypto markets have already endured a severely tough six months, with the value of Bitcoin, mainly, enduring its worst quarter in 10 years. Macroeconomic conditions globally have played a major role, with stagnating markets and inflation fears pushing conventional stock markets and their crypto peers down to painful lows.
A report published by Marion Laboure and Galina Pozdnyakova, Deutsche Bank analysts, offers an interesting perspective on the medium-term outlook for Bitcoin. Their insights indicate that crypto markets have followed the movements of the NASDAQ 100 and S&P 500 since late 2021.
The pair is convinced that the S&P will rebound to its January levels and that Bitcoin’s correlation to the index might result in a 30% increase in value from the current levels midway through 2022. That would see bitcoin back up the $28,000 level.
The forecast may quell some of the fear and uncertainty swirling around the sector, but the recovery of crypto markets is not quite clear cut. Laboure and Pozdnyakova mentioned the recent collapse of the Terra ecosystem and the Celsius saga and their influence on markets as aggravating factors:
“Stabilizing token prices is hard because there are no common valuation models like those within the public equity system. In addition, the crypto market is highly fragmented. The crypto freefall could continue because of the system’s complexity.”
Another investor note from JPMorgan indicates that the crypto network might already be in recovery. While companies like Three Arrows Capital hedge fund became insolvent after it failed to meet margin calls from the investors amid the crypto market crash, other sector players have already propped up 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 focused on the relatively healthy amount of venture capital investment into crypto companies over the last two months, to the tune of $5 billion. That represents a $3.4 billion increase from the same period in 2021.
