The largest cryptocurrency Bitcoin experienced a more than 60% decline last year, following a series of events within and beyond the crypto sector. However, even as the price currently trades at the low of $16,723, prominent Bitcoin ETF issuer VanEck predicts that the price could plunge further, at least in the first three months of 2023.
Why Bitcoin May Drop to $10k
In a recent post, VanEck said that Bitcoin’s price might decline to $10,000 – $12,000 within the first quarter of 2023. At such levels, Bitcoin would erase almost all the gains recorded since the 2020 halving rally but will also mark the “low point of the crypto winter.”
The tumultuous state of the crypto miners is one factor that might contribute to Bitcoin’s drop to $10-12k. VanEck noted that a significant number of miners are currently burning cash amid lower Bitcoin prices and expensive electricity prices. And that could eventually force most miners to restructure and merge.
Ripple losing its years-long case with the Securities and Exchange Commission (SEC), which VanEck says is possible in Q1, would also shake Bitcoin’s price and likely a broad part of the crypto market.
A $30k Bitcoin is Possible, Still
Behind the forecasted turbulence in Q1 2023, VanEck said that Bitcoin could once again reclaim a $30,000 market value, expected around the second half of the year. The Bitcoin ETF issuer believes a “possible truce in Ukraine” and lower inflation could see Bitcoin reach that price level.
Apparently, Bitcoin and the majority of cryptocurrencies have been trading largely as risk assets, which meant that prices got hammered as the Federal Reserve hiked interest rates in response to the growing inflation rate. However, the Fed is expected to pause raising rates later in 2023, which could see Bitcoin gain relief.
While the Fed may likely pause raising rates, money printing and government budget deficits will continue, according to VanEck. In such an instance, “consumers will see Bitcoin act as a store of value over time and a hedge against M2 inflation rather than overt CPI inflation,” VanEck said.