Deutsche Bank analysts predict a 30% recovery in Bitcoin by December, driven by the correlation to S&P 500.
Deutsche Bank analysts predict Bitcoin ( BTC ) will rebound to $28,000 in December 2022, as the cryptocurrency market continues to struggle with dark times.
The six-months have been difficult for Bitcoin and other cryptocurrency markets. BTC’s value has seen its worst quarter since 2010. Global macroeconomic conditions have played a part in driving down the stock and crypto markets to their lowest levels.
The medium-term outlook for Bitcoin is interestingly outlined in a report by Deutsche Bank analysts Marion Laboure and Galina Pozdnyakova. These insights indicate that cryptocurrency markets have mirrored the movements of the Nasdaq 100 & S&P 500 since late 2021.
According to the pair, the S&P will return to January levels. Bitcoin’s correlation with the index could lead to a 30% rise in value midway through 2022. BTC would then reach the $28,000 mark.
Although the prediction might calm some fear and uncertainty in the space, it does not guarantee that cryptocurrency markets will recover. Laboure and Pozdnyakova emphasized the recent fall of the Terra(LUNA) — now the Terra Classic (LUNC), — ecosystem and their impact on markets as exacerbating factor.
Stabilizing token prices can be difficult because there is no standard valuation model like the one used in the public equity system. The crypto market is also highly fragmented. Due to the complexity of the system, crypto could continue its slide.”
JPMorgan has issued a separate investor note suggesting that the crypto market may be already in recovery. After failing to meet margin calls by investors during the crypto market crash, hedge funds Three Arrows Capital and other industry players helped prop up the ecosystem.
“The current deleveraging cycle might not last very long given that crypto entities that have stronger balance sheets are currently stepping up to contain contagion. Venture-capital financing, which is an important source capital for the crypto ecosystem, also continued at a healthy rate in May and June.”
This note also noted the healthy amount of venture capital investments in cryptocurrency firms over two months, to the tune $5 billion. This is $3.4 billion more than the 2021 period.