Bitcoin’s prolonged slump might last until Q1 2023 and fall back in the $10k–$12k area against the backdrop of miner bankruptcy, signalling the low point of the crypto winter, according to Matthew Sigel, head of digital assets analysis at VanEck.
“This bitcoin mining sector is under extreme duress right now. We have an index which tracks the publicly traded companies in this sector; the median market cap is now below $200 million, and every one of these companies is burning cash, trading well below book value,” Sigel explained.
Despite this, VanEck is certain that when inflation falls, bitcoin might bounce back to $30,000 in the second part of 2023. The value of the world’s largest crypto asset is also expected to halve in 2024, an occurrence that generally occurs every four years and has historically increased the price prior to halving.
We acknowledge that bitcoin has been trading like a risk asset. The sensitivity to higher rates has been higher than I expected and one reason for that is that the political response to inflation in the developed markets has been to cap energy prices and widen sanctions; in a sense, micromanage economic activity to facilitate this energy transition.
The foundation of the BTC ecosystem is bitcoin mining, and miners’ profits also shed light on BTC price changes and the state of the whole crypto market.
It is commonly known that the present bear market is difficult for Bitcoin miners which are facing triple whammy of high hash rates and difficulty, high energy prices, and low BTC prices.
Bitcoin Miners’ Tough Days And Ripple Vs Sec Outcome
Leading Bitcoin miner Blockstream just raised money at a 70% discount according to a Dec. 7 Bloomberg report.
Another prominent miner, Compute North, filed for Chapter 11 bankruptcy. Given the industry’s interconnected behavior, the fall of one acts as a domino effect.
That being said VanEck’s other forecast include financial institutions that are anticipated to tokenize more than $10 billion in off-chain assets and that the market cap of a new decentralized stablecoin would surpass $1 billion.
A portion of sovereign debt issues will be tokenized on blockchain in Brazil, according to the investment firm, which also predicts that Ripple will lose the SEC lawsuit and Ethereum will allow withdrawals from the Beacon Chain.