Dec 12 (Reuters) – Most major banks and investment managers expect the cryptocurrency market to recover in 2023 after a tough year when bitcoin fell nearly 75% from its all-time high in November last year. I’m here.
The collapse of crypto exchange FTX is the latest in a series of liquidity squeezes and bankruptcy filings that have spooked investors, highlighting the need for more regulation in the highly speculative sector.
Ethereum and projects focused on real-world features and utilities are expected to drive the next growth.
Bitcoin may still test potential lows between $10,000 and $12,000, but could rally to $30,000 in the second half of 2023, according to Matthew Sigel, head of digital asset research at VanEck. . Bitcoin hits all-time high of $69,000 in November 2021.
Below are comments from bank and investment managers.
Marion Laboire, Research Analyst, Deutsche Bank:
“Investors have suffered heavy losses, but we believe this second ‘crypto winter’ will be a net positive as the collapse of FTX brings the crypto ecosystem closer to the established financial sector. ”
“The FTX crash has put a spotlight on well-known structural problems in the crypto ecosystem: insufficient reserves, conflicts of interest, lack of regulation and transparency, and unreliable data.”
“The market[on cryptocurrency exchanges]is more concentrated than ever before, and Binance is the biggest winner.”
“Cryptocurrencies have yet to pose a systematic contagion threat to traditional assets.”
Analysts wrote in an early December note, “We believe the Ethereum merger and actual Ethereum surge could be a big factor in terms of increasing blockchain use cases into new areas, including financial services.” I’m here.
Ethereum merger was a major event software update It went live in September and migrated to the Ethereum blockchain, which reduced energy usage by 99.95%, according to the developer. Another anticipated upgrade, The Surge, is expected to make the Ethereum network more secure and reduce the cost of processing transactions faster.
“We continue to see the Ethereum surge as a catalyst for the development of the cryptocurrency market that will emerge in at least 6-12 months.”
“As regulatory urgency rises, institutional investor engagement increases, focus and capital shifts from speculative deals to projects with real-world capabilities, and companies with roadmaps to profitability push the industry forward. It could accelerate maturity,” the analyst said in a note.
“From our perspective, we are only in the first inning of significant application change in the next 30 years.”
“While the FTX crisis appears to have reached its peak, market headwinds may abate as the mining response to price is asymmetrical. Sensitivity is growing,” the economist said in a note.
“From the crackdown in China to several price crashes in the first half of 2022, cryptocurrency mining has exhibited an almost one-to-one price-to-power relationship. and tend to widen on the positive side.” Side: Most recently, a 6% price recovery in early September was followed by a 19% recovery in Bitcoin power demand in early October (1 to 3 that’s all). ”
“While history is still too short to see any change, the current price crash in the midst of the FTX crisis and increased scrutiny from regulators in the coming months are likely.”
“Bitcoin and Ethereum futures volume and open interest … currently appear to be stable, which is consistent with implied volatility receding in line with realized values,” the strategist commented. .
“The normalization is evident in the fact that outflows from centralized exchanges have eased, and wrapped bitcoin (wBTC) discounts have bounced back significantly after widening to 1.5%. rice field.”
UBS, like most other banks, is pessimistic about the near future.
“Regulation is so looming that we see no near-term positive catalyst for a strong recovery.”
Matthew Siegel, Head of Digital Asset Research at VANECK, said:
“Given the recent rise in electricity prices and falling Bitcoin price, we predict that Bitcoin mining will be largely unprofitable and many miners will reorganize or merge in search of new funding.”
They added that an end to the war in Ukraine could reverse some of the policies aimed at curbing inflation and make bitcoin mining more politically acceptable.
“Financial institutions will adopt blockchain to simplify storage and settlement while reducing costs for their customers.”
“Our predicted winners are Ethereum, Polygon, Avalanche, Polkadot and Cosmos.”
“With sustained inflation and a young population, Latin America is the fastest adopting cryptocurrency and stablecoin in the world. Tokenization of sovereign debt may start first in Brazil.”
“Twitter could bolster its payment services with state money licenses, compete more directly with Venmo and Cash App, and integrate cryptocurrencies.”
ERIC ROBERTSEN, GLOBAL HEAD OF RESEARCH, STANDARD CHARTERED:
In a ‘surprise’ scenario for 2023, Standard Chartered predicts Bitcoin will fall to $5,000 if the current collapse widens.
LOOP MARKETS co-founder and CEO TOM NORWOOD said:
“Bitcoin demand should continue to grow regardless of market conditions. is still better.”
Norwood expects the crypto market to recover in about six months.
“I think it has to come from real-world adoption by retail users who need to part with their local fiat rather than buy cryptocurrencies and bet on new tokens.”
Reported by Susan Mathew and Bansari Mayur Kamdar of Bangalore. Edited by Saumyadeb Chakrabarty
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