Bitcoin could lose another 70% and plunge to as low as $5,000 by next year, according to Standard Chartered’s list of possible scenarios that markets may be under-pricing. The bank also speculated that investors might flock to gold, with a potential 30% rally for the yellow metal in the making.
A “Surprise” Bitcoin Scenario that Markets Are Under-Pricing
In a note on Sunday, Standard Chartered bank’s Global Head of Research, Eric Robertsen, talked about a possible Bitcoin scenario that markets have not paid much attention to. The scenario involves the flagship cryptocurrency dropping to $5,000 in 2023, losing another 70% from its current level.
This could lead to an increase in appetite for gold, spurring a 30% rally in the yellow metal. However, for this possible outcome to become a reality, there should come more crypto “bankruptcies and a collapse in investor confidence in digital assets,” as well as a reversal in interestate hikes as economies struggle, Robertsen added.
Earlier this month, FTX filed for Chapter 11 bankruptcy after failing to secure emergency funding. The collapse has had serious implications for the entire industry, particularly since the exchange was considered one of the strongest crypto companies and even earned itself a reputation as crypto’s bail-out king during the recent crypto meltdown.
More importantly, the contagion from FTX has already toppled some other crypto companies. As reported, cryptocurrency lender BlockFi filed for Chapter 11 bankruptcy late last month after freezing withdrawals one day before FTX filed for bankruptcy.
Similar to BlockFi, both Genesis Global Trading’s crypto lending branch and its close partner Gemini Earn have frozen withdrawals. While neither of the two has so far filed for bankruptcy, the situation with Genesis has caused widespread speculation about the financial health of the company.
Gold to Benefit From Troubles in Crypto
While the crypto market continues to bleed amid all the turmoil, this could actually be a win for the yellow metal. Robertsen has predicted that the precious metal will scale $2,250 an ounce if the crypto meltdown persists.
Echoing the same point of view, Nicholas Frappell, global head of institutional markets at ABC Refinery in Sydney, said gold would benefit from troubles in crypto. “Gold will benefit going forward from the problems in crypto, with the sudden decline in confidence in the crypto ecosystem,” he said.
Notably, gold sentiment is also bullish in the short term. As of now, gold is trading close to its best levels in five months, above $1,800. Moreover, optimism around China reopening and dovish Fed expectations could further pave the way for a gold rally.
Meanwhile, Bitcoin is pretty steady at the moment. The flagship cryptocurrency has been hovering around the $17,000 mark for the past two weeks since the collapse of FTX. As of now, the coin is trading at $17,305.42, up by 1.8% over the past day. The total crypto market cap stands at just over $900 billion.
This article originally appeared on The Tokenist
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