Investment bank Stifel: Bitcoin may fall to $10,000 next year

Investment bank Stifel said in a new report that Bitcoin could fall by 76% from current levels to $10,000 by 2023, and the cryptocurrency is facing three major macro headwinds affecting its price.

Stifel analyst Barry Bannister pointed out that factors affecting bitcoin prices include the global money supply, 10-year U.S. Treasury yields and the S&P 500’s equity risk premium. The Federal Reserve’s planned tightening of monetary policy in the form of interest rate hikes and a shrinking balance sheet could have a negative impact on Bitcoin prices.

He explained: “In 2022, we expect Bitcoin to be broadly volatile, capped at intraday year-to-date levels, and if the Fed continues to normalize policy in a “standard” two-year tightening cycle, by 2023, Downside risk for Bitcoin will be greater.”

Here are three macro factors that Bannister is monitoring to gauge where the price of bitcoin might go in the future.

1. global money supply

"Both the S&P 500 and Bitcoin fluctuate as global currencies are converted to dollars, Bitcoin just fluctuates more... If the dollar strengthens, then global M2 currency growth slows, which could end in a decline," Bannister said. Tight U.S. fiscal conditions. If U.S. fiscal conditions tighten, highly speculative assets like Bitcoin could fall sharply.”

2. 10-year U.S. Treasury yield

Bannister said: “If Fed tightening leads to higher real (inflation-adjusted) 10-year U.S. Treasury yields…that will dampen Bitcoin’s gains, if higher 10-year inflation-protected bond yields pull gold lower,” Bannister said. , will also put pressure on Bitcoin. If the ratio of Bitcoin to gold falls to the lower end of the range (as a result of Fed tightening), Bitcoin could fall to $10,000 by 2023.

3. Equity Risk Premium

"We don't see 10-year real yields rising more than 80 basis points in 2022 (the first year of the Fed's two-year tightening cycle), but as the Fed continues to hike rates, the S&P 500 ( and Bitcoin) will collapse in 2023; this is part of the 'equity risk premium'. Bitcoin likes a lower equity risk premium, so see if the Fed's exit will raise the equity risk premium (bearish Bitcoin) or lower stocks Risk premium (bullish).”