Analysis from Deutsche Bank says that the world’s largest cryptocurrency, Bitcoin, might rebound to a price of $28,000 by year’s end, Bloomberg reports.
Recently, Bitcoin’s value has tanked dramatically since it’s all-time high of more than $68,000 in November, in part due to concerns over interest rates and inflation, as well as fears of a looming recession. Last fall, cryptocurrency’s total market capitalization was at an eye-watering $3 trillion, but this year it slumped back to just under $1 trillion — erasing billions of dollars in market gains along with it.
However, Deutsche Bank Research Analysts Marion Laboure and Galina Pozdnyakova point out that Bitcoin does not exactly share the stability of gold. Instead, it's operating more like diamonds. The research analysts say that during the recent market selloff, Bitcoin lost over 50% of its market value and performed worse than stocks or gold (which ultimately fared better than crypto).
The recent turbulence at crypto hedge funds and lenders also spooked markets, given how interconnected crypto firms are and the high risk of financial contagion.
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"Stabilizing token prices is hard because there are no common valuation models like those within the public equity system. In addition, the crypto market is highly fragmented," they said. "The crypto freefall could continue because of the system's complexity."