These are three exemplary scenarios that could lead to a certain Bitcoin price at the end of the year, without considering technical chart factors, but rather the macro situation, monetary policy, regulation, and industry-specific factors.
Despite the price recovery since the beginning of the year, the uncertainty in the crypto market is enormous. The regulatory frenzy in the US and the liquidation of cryptocurrency-savvy banks like Silvergate, Silicon Valley Bank, and Signature are spooking investors.
However, even aside from temporary bad news, many investors may wonder what scenarios would need to occur for the Bitcoin price to reach a certain level. Although it is completely impossible to predict this, theoretical scenarios can help to better understand the impact of certain factors.
Bitcoin Price at $10,000: Worst-Case Scenario
Inflation in the western industrial nations simply will not decrease. At the same time, the rising cost of living is putting pressure on private households. As a result, they continue to lower their savings rate and sell off liquid assets like cryptocurrencies. The US Federal Reserve and the European Central Bank are surprising markets with interest rate hikes that are not only well above expectations but will last through 2023 with no relief in prospect.
Bankruptcies and scandals in the cryptocurrency sector continue, and they destroy the already tarnished confidence in the cryptocurrency sector. New EU demands are emerging aimed at banning proof of work. It intends to ban or make it difficult for European companies to offer “climate-unfriendly” cryptocurrency services.
Bitcoin Price at $30,000: The Reference Scenario
Inflation in the western industrialized nations is falling slowly. There will be no more increases in energy costs or bottlenecks in the supply chain that weigh on the economic situation of private households. The labor market situation remains stable. However, there is a small technical recession in the US and Europe. The main central banks make their last moderate rise in official interest rates (up to a final 5.75% in the US, and 4.5% in the eurozone) in autumn, and they give signs that there will be no further increases at the moment.
The US regulatory frenzy calms down over the summer, and an agreement is reached on higher regulatory requirements for the cryptocurrency sector. Companies have sufficient time for the gradual implementation of the increased requirements. There are no more scandals or major insolvencies in the cryptocurrency sector. Uncertainty among private and institutional investors remains, but there are no more outflows from the cryptocurrency sector.
Bitcoin Price at $60,000: The Best Possible Scenario
Inflation has been falling sharply since April, while economic indicators such as labor market data have weakened. American home prices are falling dangerously fast. Since the liquidation of Silicon Valley Bank, Silvergate and Signature, and other fairly small institutions, the Fed is hesitant to charge businesses and private households even higher interest rates.
A new impulse is coming from Asia. China is allowing its citizens to trade crypto through Hong Kong again and is holding back with restrictive statements. In addition, other rumors are circulating that two larger sovereign wealth funds plan to invest a small part in cryptocurrencies in the future.
By Audy Castaneda