Experts estimated the probability of bitcoin collapse to $5 thousand.
Experts named factors that could lead to a new global decline in the market of digital currencies and told how long it might take to recover
Markets underestimate the likelihood of a further drop in bitcoin by another 70%, said Eric Robertsen, head of global research at Standard Chartered. According to him, demand may shift from bitcoin, which is perceived by the market as a digital version of gold, to a real asset and that will lead to a 30% increase in the price of the precious metal.
Such a scenario is quite realistic, though its probability is quite low, said a senior Bestchange analyst. He does not see serious preconditions for realization of the forecast, but also does not exclude it.
"In the boldest models we even consider a decrease to $3 thousand in the next few years, if everything goes on a sharply negative scenario. That said, the model itself implies long-term viability of the entire ecosystem even after such a price drop, but a prolonged drop below that level would already be seen as a complete collapse of the industry, turning the entire cryptocurrency industry into a "geek toy" with a total abandonment of this means of value transfer or an asset for their investments by major players."
According to him, such a decline, if it happens, will be the result of a long downtrend with a series of relatively small drops and long periods of consolidation for several months at each stage of the fall. The expert named geopolitics as the main source of risks in this case, which constantly strengthens the financial crisis superimposed on it.
Reasons for a possible bitcoin collapse
Bitcoin refers to risky assets, reminded the financial analyst BitRiver . He listed the main factors affecting the cryptocurrency:
Tightening of monetary policy by central banks;
decline in U.S. stock indices;
strengthening of the dollar;
bankruptcies of major exchanges and cryptocompanies;
tighter regulation of cryptocurrency transactions;
Bitcoin sales by miners (business operating costs).
The head of the analytical department of AMarkets added that among the reasons that could lead to a further collapse of bitcoin, the bankruptcy of FTX, which launched a "domino effect", when the lack of liquidity and other problems spilled over to other companies in the crypto industry. The specialist pointed out that about 130 companies related to the crypto market have gone bankrupt this year.
"The loss of confidence in cryptocurrencies from investors, the fear of being left without the ability to withdraw their funds - this factor will stimulate the activity of users, who will take money from exchanges and transfer it to cold wallets or decentralized exchanges."
He claims that bitcoin and other cryptocurrencies will definitely collapse.
"Then, after a short time (at most until the end of the first half of 2023) bitcoin could fall below $10,000," the expert suggested.
The leading analyst of 8848 Invest did not agree with him and called such decrease unprofitable for the major market players, particularly miners and institutional investors. They have enough power to prevent such a collapse if nothing extraordinary happens in the markets and in the world that would surpass the scale of the collapse of FTX and Terra. According to him, any movement to the $5,000 level will be actively redeemed by the market, and for every sold their BTC there will be a buyer.
"There is an oversupply of fiat money in the global economy, and central bank actions have not yet particularly reduced the money supply (M2), so investors will obviously want to invest fiat in something that can give multiple profit potential. Cryptocurrency, given its historical dynamics, is an excellent contender," said the specialist.
Forecast for market recovery
Pershikov sees no reason not to expect bitcoin to update its historical high just because of the strong collapse of the rate. However, the analyst warned that such a recovery will take years and will not be sharp.
Decrease to $5 thousand will not be something irreversible, although all the markets will have to adjust to the new realities and it will be a long painful process.
Bubble formation lasts about three years after a bottom is found. He warned that on a historical model with a logarithmic scale, the active growth phase is in the second half of 2024 after the halving in May. If in the next month there will be no news about the bankruptcies of prominent exchanges, the scenario of reduction to the level of $5 thousand seems unlikely to the financial analyst.
The recovery of cryptocurrency market is possible only in a situation when the whole world economy and stock market come to stability, Deyev concluded. He assumed that it may take several years, as the bottom of falling stock indices is still ahead.