According to an analysis done by Deutsche Bank, Bitcoin price could reach as high as $28,000 by the end of this year given how closely it has been trading with US stocks.
The world’s largest digital token collapsed in 2022 due to the risk of mood-driven rate hikes and fears of inflation. The analysis done by Marion Laboure and Galina Pozdnyakova suggests that a more than 30% rally from the coin’s Wednesday trading level reached around $20,000. However, even this price is less than half of its peak in November.
Laboure and Pozdnyakova said, “Ever since November, cryptocurrencies have been increasingly correlated to benchmarks like the tech-heavy Nasdaq 100, and the S&P 500.”
As per the bank strategies, it is predicted that the S&P will recover to January levels by the end of the year and Bitcoin might jump in for the ride.
Bitcoin failed to live up to the expectations of many, as many hoped that it would prove to be an investor refuge. Digital coins have underperformed stocks, bonds, and commodities during the market-wide rout as the removal of excess liquidity by major central banks created downward pressure on their prices. Gold, however, performed much better.
They further added, “By marketing an idea rather than a product, they built a solid foundation for the $72 billion-a-year diamond industry, which they have dominated for the last eighty years. What’s true for diamonds, is true for many goods and services, including Bitcoins.”
Laboure and Pozdnyakova also pointed toward the troubles that have gripped the crypto space in the past few weeks, including turmoil in some digital-asset hedge funds.
Additionally, “Stabilizing token prices is hard because there are no common valuation models like those within the public equity system.” They further concluded that the crypto freefall might continue because of the complexity of the system.