- In a report by Marion Laboure and Galina Pozdnyakova, analysts at Deutsche Bank, they noted that if Bitcoin maintains its correlation with the S&P500, BTC could hit $28k as they expect the S&P to recover to its January levels. .
- Bitcoin has maintained a positive correlation with the Nasdaq 100 and S&P 500 indices since the end of 2021.
- According to analysts, Bitcoin’s performance may be modest during a period of high inflation.
For some investors, their relationship with Bitcoin (BTC) can be love-hate, especially if they have not experienced other bearish cycles that have ended in interesting bullish cycles. However, the reality is that Bitcoin posted its second worst quarterly performance since its inception.
According to data from SkewDecrypt reported that Bitcoin posted its most significant quarterly loss in 11 years, coming in at 56.27%. The single biggest quarterly loss happened in the third quarter of 2011, at which point the price of BTC fell back by 66.62%.
Based on these data, it is normal for investors to begin to ask the question: Where is Bitcoin headed? Will we ever get out of this downward cycle? The answers are varied and depend on who you ask and whether or not they believe in the technology of the crypto leader.
However, it is always particularly interesting to know what analysts from renowned banking institutions such as Deutsche Bank think.
Projections for Bitcoin
It was recently made public a report conducted by Marion Laboure and Galina Pozdnyakova, analysts at Deutsche Bank, where they provide a medium-term outlook for Bitcoin.
In particular, analysts noted that the cryptocurrency market has mirrored the movements of the Nasdaq 100 and S&P 500 since the end of 2021. That is, both markets have a positive correlation. For example, the S&P 500 has seen a 21% decline since the beginning of the year.
If this correlation is maintained, analysts see it as possible that Bitcoin recovers the price of $28 thousand US dollars as they expect the S&P to recover to its January levels.
Likewise, analysts compared Bitcoin to diamonds. Yes, diamonds instead of gold. They specifically mentioned De Beers, a company in the diamond industry that changed the consumer’s perception of diamonds.
“What is true for diamonds is also true for many goods and services, including Bitcoin”, the analysts explained.
How is the market in general?
Although it is normal for Bitcoin to experience both bearish and bullish cycles, the current context may be a bit more complicated than that.
Deutsche Bank analysts explain the impossible mission that is to stabilize the price of cryptocurrencies since “there are no common valuation models such as those of the public capital system” and, furthermore, the market is fragmented.
In this way, the analysts establish a high probability that speculative transactions involve the simultaneous use of several currencies, increasing the indirect effects.
“Crypto freefall could continue due to system complexity“, assured the bank.
But, additionally, the macro context is quite worrying. Deutsche Bank explains whate, as Bitcoin is a high-risk speculative asset, it is impacted “disproportionately by the tightening of the central bank”, saccording to CoinDesk.
The reality is that the cycle of central bank tightening is far from over. In addition, analysts see a high probability that a recession knocks on the doors of the United States in 2023, along with general inflation of 9.1% in September.
Consequently, “unless Bitcoin becomes digital oil,” its Performance may be modest during a period of high inflation, Laboure and Pozdnyakova note.
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