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how the market got it wrong

The cryptocurrency market has taken a hit this year, with more than $2 trillion worth lost since peaking in November 2021. Cryptocurrencies are under pressure after the collapse of major exchange FTX.

Jonathan Lah | Null Photo | Getty Images

2022 marks the beginning of a new “crypto winter,” with high-profile companies collapsing across the board and digital currency prices tumbling dramatically. This year’s events have taken many investors by surprise and made the task of predicting Bitcoin’s price more difficult.

The crypto market was flooded with experts making enthusiastic calls about where Bitcoin is headed next. While they were mostly positive, some correctly predicted that the cryptocurrency would drop below $20,000 per coin.

However, many market watchers were caught off guard. A tumultuous year for cryptofailures of well-known companies and projects have shocked the entire industry.

It started with the collapse of Terra USD (UST) in May. USDThat failure brought down terraUSD’s sister token luna and hit companies exposed to both cryptocurrencies.

Hedge fund Three Arrows Capital, which is bullish on cryptocurrencies, entering into liquidation When filing for bankruptcy Because it is exposed to terraUSD.

then came FTX collapse in Novemberwas run by Sam Bankman-Fried, an oft-hit executive at one of the world’s largest cryptocurrency exchanges. The influence from FTX continues to ripple through the cryptocurrency industry.

In addition to crypto-specific failures, investors have also had to deal with rising interest rates, putting pressure on risky assets such as stocks and cryptocurrencies.

Since hitting a record high of around $69,000 in November 2021, Bitcoin has fallen about 75%, wiping more than $2 trillion from the value of the entire cryptocurrency market. Bitcoin was trading just under $17,000 on Friday.

CNBC reached out to the people who made Bitcoin’s boldest pricing decisions in 2022 and asked them how they got it wrong and whether events this year have changed their outlook for the world’s largest digital currency. I was.

Tim Draper: $250,000

In 2018, at a tech conference in Amsterdam, Tim Draper predicted that Bitcoin will reach $250,000 per coin by the end of 2022. A famous Silicon Valley investor wore a purple tie with the Bitcoin logo. rapped About digital currency on stage.

Four years later, Draper’s call seems unlikely to come to fruition. When the Draper Associates founder was asked about his $250,000 goal earlier this month, he told CNBC that $250,000 is “still my number,” but he didn’t make his predictions. 6 months extension.

“We expect a flight to high-quality, decentralized cryptocurrencies like Bitcoin and some of the weaker coins to become relics,” he told CNBC in an email.

For Draper’s prediction to come to fruition, Bitcoin would need to rise nearly 1,400% from its current price of just under $17,000. His rationale is that despite the liquidation of prominent players in the market like FTX, Bitcoin still has a huge untapped demographic: women.

“With women controlling 80% of retail spending and only one-seventh of bitcoin wallets owned by women today, my guess is that the dam is about to burst,” Draper said. said Mr.

Nex: $100,000

In April, Antoni Trenchev, CEO of crypto lender Nexo, told CNBC that he believes the world’s largest cryptocurrency is possible. Soaring above $100,000 “Within 12 months,” Trenchev admitted, although there are still four months left, bitcoin is unlikely to go that far anytime soon.

According to Trenchev, bitcoin was “following a very positive path” and increasing institutional adoption, but “several key forces were thwarted”.

Read more about CNBC Pro tech and crypto

“While we are pleasantly surprised by the stability of cryptocurrency prices, we are still a little skeptical about the V-shape as we are not yet out of the woods and have yet to see the second and third order effects. I will,” Trenchev said.

The entrepreneur said he also made Bitcoin price predictions. “But my advice to everyone remains the same,” he added. “Bitcoin investable assets he gets single digit percentage points and don’t look at it for 5-10 years. Thank you later.”

Guido Buehler: $75,000

On January 12th, Guido Buehler, former CEO of crypto-focused Swiss regulated bank Seba, said his company has an “internal valuation model” for Bitcoin in 2022 between $50,000 and $75,000. said to be between

Buehler’s reasoning was that institutional investors would help drive prices higher.

SEBA Bank CEO Says Institutional Investors Are Looking For The Right Time To Enter Crypto

At the time, Bitcoin was trading between $42,000 and $45,000. Bitcoin he never reached $50,000 in 2022.

The executive, who now runs his own advisory and investment firm, said 2022 was a “terrifying year,” in response to CNBC’s question about what went wrong on the call.

“The war in Ukraine in February shocked the paradigm of the world order and financial markets,” Buehler said, weighing the consequences of increased market volatility and higher inflation in light of turmoil in commodities such as oil. mentioned.

Another major factor is the “perception that interest rates are still the driving force for most asset classes, including crypto,” and that “for the crypto community, it has been believed that this asset class is uncorrelated with traditional assets.” It was a big blow.”

Buehler said the lack of risk management, lack of regulation and fraud in the crypto industry are also major factors affecting prices.

However, the executive remains bullish on Bitcoin, saying it will reach $75,000 “sometime in the future,” but it’s “all a matter of timing.”

“BTC has proven its robustness through every crisis since 2008 and we believe it will continue to do so.”

Paolo Aldoino: $50,000

Paolo Ardoino, chief technology officer of Bitfinex and Tether, told CNBC in April that he expects Bitcoin to be well below $40,000 but to be “well above” $50,000 by the end of the year. Told.

“I’m a bullish person when it comes to Bitcoin…I’m really positive because I’ve seen so much going on in this industry and so many countries are interested in adopting Bitcoin.” is,” he said at the time.

Bitfinex CTO expects Bitcoin to be 'well over $50,000' by the end of the year

On the day of our interview, Bitcoin was trading above $41,000. The first part of Ardoino’s call was correct — Bitcoin fell well below his $40,000. However, he never recovered.

In a follow-up email earlier this month, Ardoino said he believed in the resilience of Bitcoin and its underlying blockchain technology.

“Like I said, predictions are difficult. No one could have predicted or predicted that a number of companies highly regarded by the international community would fail in such a spectacular way,” he told CNBC. Told.

“There remain some legitimate concerns and questions about the future of cryptocurrencies. It may be a volatile industry, but the technology behind it is impressive.”

Deutsche Bank: $28,000

A key theme for 2022 was the correlation between Bitcoin and US stock indices, especially the technology-heavy Nasdaq 100. Bitcoin was trading at just over $20,000 at the time of the memo.

This was based on Deutsche Bank equity analysts’ expectations that the S&P 500 would jump to $4,750 by the end of the year.

But that call is unlikely to come true.

How the $60 Billion Crypto Collapse Worried Regulators

Marion Laboret, one of the authors of Deutsche Bank’s first report on cryptocurrencies published in June, said the bank now expects Bitcoin to end the year at around $21,000.

“High inflation, monetary tightening and slowing economic growth are likely to be putting downward pressure on the cryptocurrency ecosystem,” Labor told CNBC, adding that traditional assets such as bonds outperform Bitcoin. It may start to look attractive to investors, he added.

Laboure also said the high-profile collapse continues to take a toll on sentiment.

“Every time a major player in the crypto industry goes bankrupt, the ecosystem faces a credit crisis,” she said.

“In addition to lack of regulation, the biggest hurdles for cryptocurrencies are lack of transparency, conflicts of interest, liquidity, and reliable and available data. It reminds me of something.”

JP Morgan: $13,000

In a Nov. 9 research note, JP Morgan analyst Nikolaos Panigirtzoglou and his team predicted that Bitcoin’s price would fall to $13,000 “in the coming weeks.” They benefited from hindsight after the FTX liquidity crisis, triggering a “new phase of cryptocurrency deleveraging” and putting downward pressure on prices.

The cost it takes miners to create a new bitcoin has historically served as a ‘bottom floor’ for bitcoin’s price, likely revisiting the summer low of $13,000, analysts say. the list said. This isn’t as far off from Bitcoin’s current price as other predictions, but it’s still well below Friday’s price, just under $17,000.

A JP Morgan spokeswoman said Panigirtzoglou “cannot comment further” on the research team’s predictions.

Absolute Strategic Research: $13,000

Ian Harnett, co-founder and chief investment officer of macro research firm Absolute Strategy Research, said: Warned in June The world’s top digital currency is likely to drop to $13,000.

Explaining his bearish view at the time, Harnett said that in the past cryptocurrency rally, Bitcoin has since tended to drop about 80% from its all-time high. For example, after peaking near $20,000 in late 2017, he plummeted to near $3,000 in 2018.

Harnett’s target is closer than anyone else’s, but Bitcoin needs to drop another 22% to reach that level.

Bitcoin Could Fall to $13,000 as Fed Tightens, Strategists Warn

When asked how he felt about today’s call, Harnett said, “I’m very happy to suggest that we’re still in the process of deflating the Bitcoin bubble,” adding that the nearly $13,000 drop was a bit more. I said it was still on the card.

“Bubbles typically see an 80% reversal,” he said in response to an emailed question.

According to Harnett, the US Federal Reserve is likely to raise interest rates further next year, with further cuts from $13,000 to $12,000 to $10,000 undeniable.

“Unfortunately, there is no intrinsic valuation model for this asset.In fact, there is no consensus on whether it is a commodity or a currency. Failed,” he said.

Mark Mobius: $20,000, then $10,000

Carol Alexander: $10,000

In December 2021, one month after bitcoin hit an all-time high, Sussex University professor Carol Alexander said he expects bitcoin to fall to “$10,000 or more” in 2022. rice field.

At the time, Bitcoin had fallen about 30% from its record near $69,000. Still, many cryptocurrency experts at the time predicted further gains. Alexander was one of those rare voices that defied the tide.

How Wall Street came to love Bitcoin

“If I were an investor now, I would consider getting out of bitcoin immediately because the price of bitcoin will probably crash next year,” she said at the time. Her bearish view is based on the idea that Bitcoin has little intrinsic value and is primarily used for “speculation.”

Bitcoin didn’t drop below $10,000, but Alexander is happy with her prediction. “Compared to other people’s predictions, my predictions were much closer,” she commented to CNBC in an email.

https://www.cnbc.com/2022/12/23/bitcoin-price-calls-in-2022-how-the-market-got-it-wrong.html how the market got it wrong

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