Bitcoin could fall to $5,000 by 2023

The world’s first and largest crypto-currency could drop to $5,000 in a scenario imagined by the banking group, the bursting of the “crypto bubble” with ramifications throughout 2023.

“Yields plunge along with tech stocks, and if the bitcoin selloff slows down, the damage is done“, writes the bank’s head of global research, Eric Robertsen.

The prediction was made as part of Standard Chartered’s annual list of surprises that analysts believe the markets may overlook or undervalue.

Other possible surprises for the coming year include a drop in oil prices, the impeachment of U.S. President Joe Biden and a collapse in food prices.

The list, now in its eighth edition, is not intended to predict high-probability events, but to consider situations with a non-zero chance of occurring that are not currently part of the market consensus.

If more crypto companies and exchanges run out of cash, according to the report, investor confidence in crypto assets could plummet and send people back to the classic safe haven of gold.

Under this scenario, gold could soar by 30%. The precious metal has received little love in 2022, falling 20% from its March highs, but it could benefit from a drop in confidence in crypto.

Bitcoin follows general tech decline

Standard Chartered has also identified the possibility of a broader decline in tech stocks, even exceeding the beating taken by many companies this year.

Nasdaq 100 company values are down about 25% in 2022, but analysts have compared that to the even larger decline seen during the dot-com crash of the early 1980s, suggesting there is still room to run.

Such a drop could be linked to the woes of the crypto industry, the researchers wrote.

“Perhaps echoing the contraction of the digital asset sector, next-generation tech companies see a surge in bankruptcies in 2023“, they stated.

Meanwhile, early-stage companies may find it harder in this situation to get funding, as financing costs rise and cash flow shrinks.