The outlook for risky assets remains bright after the US Federal Reserve’s (Fed) US inflation report on Tuesday. However, according to investment giant VanEck, Bitcoin (BTC) may come under pressure as several miners go bankrupt, eclipsing improving macroeconomic conditions. Here are the details…
VanEck: Bitcoin could test $10,000-12,000
Matthew Sigel, VanEck’s head of cryptoassets research, pointed to $10,000-12,000 for BTC. In its report on the 2023 outlook, “Bitcoin will test $10,000-12,000 in the first quarter amid a wave of miner bankruptcies that will mark the lowest point of the crypto winter.” said. This year, Bitcoin miners, or those responsible for mining, are caught between rising operating costs and falling Bitcoin prices.
The profitability of miners is closely tied to the price of Bitcoin, given that they receive the cryptocurrency as a reward for solving complex mathematical puzzles to verify transactions on the Blockchain. Prizes received are often liquidated to fund operational costs. Therefore, when the price drops by 61 percent, as it did this year, this leads to the capitulation of the miners. This is a situation where weak miners exit the market and sell their reserves, causing the price to drop further. In the worst-case scenario, capitulation can lead to a “death spiral”.
Miners have sold 25,000 BTC since July
Now miners are consuming their stash of coins to deal with adverse market conditions. Data tracked by blockchain analytics firm Glassnode shows that the balance held in miner wallets has dropped by over 25,000 BTC ($444 million) since July, reaching a 14-month low of 1,818 million BTC. This trend could continue as most mining companies are pouring cash. Sigel used the following statements:
The MVIS-Global Digital Assets Mining Index average market cap is currently only $180 million, with nearly all components burning cash and trading well below book value. Given the recent rising electricity prices and low Bitcoin prices, we anticipate that many miners will go for restructuring as Bitcoin mining is largely unprofitable.
Expectation of 30,000 dollars in the second half of 2023
A drop to $12,000 would mean an 82 percent drop from the record high of $69,000 recorded in November 2021. The previous two bear markets have exhausted their momentum, down nearly 85 percent from then-record levels. Sigel expects Bitcoin to return to $30,000 in the second half of 2023. Sigel used the following statements:
Low inflation, easing energy concerns, a possible ceasefire in Ukraine and a rollback in M2 supply will fuel the start of a new bull market. An oil-exporting country will add its cryptocurrency to its sovereign wealth fund.
VanEck also expects financial institutions to reach a market cap of $1 billion by tokenizing more than $10 billion in off-chain assets and a new decentralized stablecoin. The investment giant also points out that Brazil has become one of the most crypto-friendly countries in the world. He points out that he is tokenizing some of his government debt offerings on the Blockchain. He states that Ripple’s loss of the SEC case and Ethereum’s withdrawal from the Beacon Chain are also among his predictions.
Risk Disclosure: The articles and articles on Kriptokoin.com do not constitute investment advice. Bitcoin and cryptocurrencies are high-risk assets, and you should do your due diligence and do your own research before investing in these currencies. You can lose some or all of your money by investing in Bitcoin and cryptocurrencies. Remember that your transfers and transactions are at your own risk and any losses that may occur are your responsibility. Cryptokoin.com does not recommend buying or selling any cryptocurrencies or digital assets, nor is Kriptokoin.com an investment advisor. For this reason, Kriptokoin.com and the authors of the articles on the site cannot be held responsible for your investment decisions. Readers should do their own research before taking any action regarding the company, assets or services in this article.
Disclaimer: Advertisements on Kriptokoin.com are carried out through third-party advertising channels. In addition, Kriptokoin.com also includes sponsored articles and press releases on its site. For this reason, advertising links directed from Kriptokoin.com are on the site completely independent of Kriptokoin.com’s approval, and visits and pop-ups directed by advertising links are the responsibility of the user. The advertisements on Kriptokoin.com and the pages directed by the links in the sponsored articles do not bind Kriptokoin.com in any way.
Warning: Citing the news content of Kriptokoin.com and quoting by giving a link is subject to the permission of Kriptokoin.com. No content on the site can be copied, reproduced or published on any platform without permission. Legal action will be taken against those who use the code, design, text, graphics and all other content of Kriptokoin.com in violation of intellectual property law and relevant legislation.