• Crypto market 2022 marked by scandals and price crashes
• VanEck: Bitcoin is likely to fall further in 2023 – wave of insolvencies among crypto miners expected
• Fund manager expects recovery in the second half of the year
2022 is likely to be remembered negatively by crypto investors. The year was marked by scandals – such as the debacle surrounding the crypto lenders Celsius and Voyager, the hedge fund Three Arrow Capital and the digital token Terra/LUNA and the bankruptcy of the crypto exchange FTX – and price crashes. Last year, the most popular and largest cryptocurrency by market capitalization, Bitcoin, lost around 65 percent in value. According to a fund manager, Bitcoin could initially go down further in 2023 – but then there should be a recovery.
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Bitcoin is likely to fall further initially in 2023
Despite the slowdown in inflation and the tightening of the monetary policy by the US Federal Reserve, investment manager VanEck initially remains pessimistic about Bitcoin. Matthew Sigel, VanEck’s head of digital assets research, wrote in a 2023 crypto outlook that he believes a wave of bankruptcies among crypto miners caught between rising operating costs and falling bitcoin prices in 2022 is increasing selling pressure on bitcoin and “should mark the bottom of the crypto winter,” reports CoinDesk. “The median market cap of the MVIS Global Digital Assets Mining Index is now just 180 [Millionen] US dollars, with nearly all constituents burning cash and trading well below book value. With bitcoin mining largely unprofitable given recent higher electricity prices and lower bitcoin prices, we predict many miners will restructure or merge,” CoinDesk quoted Sigel as saying.
According to Sigel, the Bitcoin price should therefore fall back in the direction of USD 10,000 to 12,000 in the first quarter of 2023. That would be down more than 80 percent from its all-time high of around $69,000 set in November 2021. From its current price of 16,731.85 US dollars (as of January 2nd, 2023), Bitcoin could still fall by around 28 to 40 percent to the mentioned marks.
A recovery beckons in the second half of the year
However, after that, Sigel expects a rebound for the oldest and largest cryptocurrency by market cap, according to CoinDesk. In the second half of the year, according to the fund manager, bitcoin could rally back to $30,000 – up around 79 percent from the current price – as “lower inflation, easing energy worries, a possible ceasefire in Ukraine and a trend reversal in of M2 supply” would fuel the start of a new bull market, according to Sigel, who also notes that an oil-exporting nation would add the cryptocurrency to its sovereign wealth fund.
According to Sigel, one reason for Bitcoin’s poor response to the rate hikes is that “the policy response to higher inflation in developed markets has been to try to cap energy prices, expand sanctions, and micromanage economic activity to to facilitate the energy transition,” cryptoglobe.com reports. However: “Should our recessionary expectations materialize, the US Federal Reserve would likely pause rate hikes amid slowing inflation while money printing and government budget deficits continue. Merely a lack of bad crypto-specific news in the above scenario could cause the price of Bitcoin to bounce back climbs back to $30,000,” the fund manager said.
More crypto predictions from VanEck
Alongside this, as CoinDesk reports, VanEck predicts that financial institutions will tokenize more than $10 billion in off-chain assets and a new decentralized stablecoin will hit $1 billion in market cap. The investment manager also expects Brazil to become one of the most crypto-friendly countries in the world and tokenize part of the government bond offerings on the blockchain. In addition, according to VanEck, Ripple should lose the lawsuit against the Securities and Exchange Commission (SEC) in the USA and Ethereum will enable withdrawals from the Beacon Chain in the future.
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