After reaching heady heights in 2021, the cryptocurrency market has had to weather a period of tightening monetary policy, which has resulted in sell-offs, the implosion of projects like Terra, the bankruptcy filings of CeFi companies like Celsius Network and Voyager Digital, and the ultimate collapse of the FTX exchange in 2022.
Many in the crypto community are divided on whether or not 2023 will be a good year for cryptocurrencies. Due to the larger economy’s difficulties, many analysts feel this downturn is unique. On the other hand, when asked whether 2023 would be a bullish or negative year, roughly 84% of respondents to a survey by CoinmarketCap said the former.
After dropping to a low around the $10,000 to $12,000 level, the price of Bitcoin (BTC), the flagship cryptocurrency, may rise to $30,000 in the second half of 2023, according to a prediction by a fund manager at investing giant VanEck.
However, analysts at JPMorgan believe that since crypto’s image was severely damaged by the crises and scandals that occurred in 2022 and broader markets are suffering, another leg lower to $10,000 for BTC in 2023 may not be such an outlandish prediction.
On the other hand, during an interview with Bloomberg, the chief investment officer at Guggenheim Partners, Scott Minerd, issued a warning to investors that more market disruptions are on the horizon in the wake of the recent failure of the cryptocurrency exchange FTX.
When asked whether he thinks that there is going to be another shoe to drop in the financial stability aspect of the cryptocurrency sector, Minerd responded simply that yes, there is.
“The reason is this is just like any number of periods where we had easy money and a lot of speculation; the weakest players fall first. Crypto was obviously something that is crazy.”
He added that: “A year ago we were talking about crypto, and there were approximately 19,000 coins. There is going to be a washout just like the Internet bubble.”
However, he reassured listeners that there will be survivors, noting that the transition to digital currency is still in its infancy and that its further development needs a legal and regulatory infrastructure.
Furthermore, the Guggenheim executive made a comparison between the bitcoin sector and the dot-com bubble in his assessment. He also said that he had been unable to comprehend the excitement that had surrounded the non-fungible token (NFT) industry, which seemed to have subsided at this point.
Notably, the investor forecasted earlier this year that the price of Bitcoin might hit rock bottom at the amount of $8,000 before continuing its upward trend.
Minerd has also predicted that the Federal Reserve’s restrictive monetary policy would cause an increase in unemployment of around 2% over the course of the next two years.
It remains to be seen whether his forecast for BTC will come to pass. The cryptocurrency has been trading in the negative for the previous 24 hours, now hovering around $17,000.
Nonetheless, Minerd’s forecasts are nothing more than his own opinions. He does not have the ability to predict the future with certainty. Analysts’ forecasts should never be relied on blindly by investors. Anything can happen.