Deutsche Bank analysts see Bitcoin recovering to $28K by December

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Analysts from Deutsche Bank have predicted that Bitcoin (BTC) will rebound to $28,000 by December 2022 as the cryptocurrency market continues to face tough times.

Bitcoin and the broader cryptocurrency markets have had a rough six months, with the value of BTC, in particular, bearing its worst quarter in 10 years. Macroeconomic conditions around the world have played a role, as stagnating markets and inflation fears have pushed traditional stock markets and their cryptocurrency peers to painful lows.

A report from Deutsche Bank analysts Marion Labouri and Galina Pozdnakova offers an interesting perspective on the medium-term outlook for Bitcoin. Their insights indicate that the cryptocurrency markets have reversed the movements of the Nasdaq 100 and S&P 500 since late 2021.

The pair believes that the S&P will bounce back to its January levels and that Bitcoin’s correlation with the index could lead to a 30% increase in value from current levels midway through 2022. This would see BTC return to the $28,000 mark.

RELATED: Better Days Coming as Crypto Debt Elimination Approaches – JPMorgan

The prediction may calm some of the fear and uncertainty swirling around the space, but the recovery of the cryptocurrency markets is not entirely clear. Laboure and Pozdnyakova highlighted the recent collapse of the Terra ecosystem and the Celsius disaster and their impact on the markets as exacerbating factors:

“It is difficult to stabilize token prices because there are no common valuation models like those in the public equity system. In addition, the cryptocurrency market is highly fragmented. The free fall of digital currencies can continue due to the complexity of the system.”
A separate investor note from JPMorgan suggests that the crypto ecosystem may already be on the mend. While companies like hedge fund Three Arrows Capital have become insolvent after failing to meet margin calls from investors amid the crypto market crash, other industry players have bolstered the ecosystem:

“The current de-leveraging cycle may not be very long given the fact that crypto entities with stronger balance sheets are now stepping in to help contain the contagion and that venture capital financing, an important source of capital for the crypto ecosystem, continued its healthy pace in May and June “.
The memo also highlights the relatively healthy amount of venture capital investments in crypto companies over the past two months — to the tune of $5 billion. This represents an increase of $3.4 billion over the same period in 2021.

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