Bitcoin Can Test $10,000 by 2023

Tesla just sold $1 billion in Bitcoin. That alone will be a bloodbath in the markets. Bitcoin is already down 40% from its historic high of $69,000 last year. That may just be the beginning of a long price drop.

Bitcoin could fall another 76% from current levels to $10,000 by 2023, as the cryptocurrency faces headwinds that are clearly impacting the price. A price drop of $10,000 would mean an overall loss of up to 86%.

Both the S&P 500 and Bitcoin would move in the opposite direction to the strength of the dollar. As the dollar strengthens, global monetary growth slows. Speculative assets like bitcoin would likely fall significantly as a result.

Many cryptocurrencies so far have been devastating

But what happens after the crisis? It’s easy to answer.

For example, in June 2022, Ethereum at times was worth only a quarter of what it was in November 2021, while Bitcoin fell below the $19,000 mark for the first time since November 2021, losing 70 percent of its last all-time high.

So the impending crypto winter is about to arrive again, in which prices will continue to plummet and may not fully recover for years to come.

As cryptocurrencies are traditionally subject to strong fluctuations, there have already been several crypto winters in recent years. Like 2014 and 2018. When many investors temporarily lost interest in digital assets before recovering later.

But this time the economic environment is especially difficult and different.

1. Interest rates and fears

Recession worries are weighing on cryptocurrencies.

Bitcoin and other cryptocurrencies are currently stuck in the markets. As a result of the crisis in Ukraine and global supply chain problems following the Corona crisis, inflation in many countries is now higher than it has been for decades.

In order to counteract this inflationary pressure, many major central banks in Europe have already initiated a turnaround in interest rates or are likely to do so soon.

As might be expected, this has led to a rapid rise in interest rates in the capital markets. This affects risky forms of investment, including cryptocurrencies. Fixed income securities (government bonds or government debt securities) are becoming more attractive again.

2. Problems with cryptocurrencies companies

Numerous cryptocurrency corporations are also facing major problems and are already reacting with a wave of layoffs.

After concerns about inflation and recession, the volume of cryptocurrency trading has suffered greatly recently. As many cryptocurrency companies derive their revenue from transaction fees, their success depends heavily on the size of the trading volume.

3. Macroeconomic news is in the spotlight

Bitcoin has been trading between $19,000 and $24,000 in recent weeks. But $19,000 is not Bitcoin’s bottom.

Macroeconomic factors play an important role here. Cryptocurrency prices will stabilize and find a bottom when rampant inflation is brought under control. An important aspect is also the downsizing of cryptocurrency companies and projects. If there are no more surprise corporate collapses, this would help the market find a bottom.

A “point accumulation phase” would also be possible, in which Bitcoin would find a bottom and then move within a certain range for a few months before the price continues to rise.

In either case, Bitcoin could fall further from current levels to between $13,000 and $14,000. If institutional investors come into the picture, this would help support the Bitcoin price.

4. Loose monetary policy favors Bitcoin

History shows that when monetary policy loosens, Bitcoin enters the upswing. If central bank policy is reversed and the money supply is reduced, bitcoin stagnates or collapses. Again.

This is the trend pattern that has been repeating itself since 2012. The Fed has said we are not going to give you free money forever. That may have a marginal effect this year, but by 2023 the central bank is probably going too far and bitcoin will be squeezed out like orange juice.

The Fed has a habit of squeezing every last drop that can break the camel’s back. They test how far they can go before the market collapses and a bear market emerges.