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FTX Blowout Could Drop BTC to $5,000 and Shift Demand to Gold

By The Tokenist (Ruholamin Haqshanas )CryptocurrencyDec 05, 2022 06:51AM ET
www.investing.com/analysis/ftx-blowout-could-drop-btc-to-5000-and-shift-demand-to-gold-200633131
FTX Blowout Could Drop BTC to $5,000 and Shift Demand to Gold
By The Tokenist (Ruholamin Haqshanas )   |  Dec 05, 2022 06:51AM ET
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An underpriced scenario for Bitcoin involves the flagship crypto dropping to $5,000 if the meltdown persists.

Bitcoin could lose another 70% and plunge to as low as $5,000 by next year, according to Standard Chartered’s list of possible scenarios that markets may be under-pricing. The bank also speculated that investors might flock to gold, with a potential 30% rally for the yellow metal in the making.

A “Surprise” Bitcoin Scenario that Markets Are Under-Pricing

In a note on Sunday, Standard Chartered bank’s Global Head of Research, Eric Robertsen, talked about a possible Bitcoin scenario that markets have not paid much attention to. The scenario involves the flagship cryptocurrency dropping to $5,000 in 2023, losing another 70% from its current level.

This could lead to an increase in appetite for gold, spurring a 30% rally in the yellow metal. However, for this possible outcome to become a reality, there should come more crypto “bankruptcies and a collapse in investor confidence in digital assets,” as well as a reversal in interest-rate hikes as economies struggle, Robertsen added.

Earlier this month, FTX filed for Chapter 11 bankruptcy after failing to secure emergency funding. The collapse has had serious implications for the entire industry, particularly since the exchange was considered one of the strongest crypto companies and even earned itself a reputation as crypto’s bail-out king during the recent crypto meltdown.

More importantly, the contagion from FTX has already toppled some other crypto companies. As reported, cryptocurrency lender BlockFi filed for Chapter 11 bankruptcy late last month after freezing withdrawals one day before FTX filed for bankruptcy.

Like BlockFi, Genesis Global Trading’s crypto lending branch and its close partner Gemini Earn have frozen withdrawals. While neither of the two has so far filed for bankruptcy, the situation with Genesis has caused widespread speculation about the company's financial health.

Gold to Benefit From Troubles in Crypto

While the crypto market continues to bleed amid all the turmoil, this could actually be a win for the yellow metal. Robertsen has predicted that the precious metal will scale $2,250 an ounce if the crypto meltdown persists.

Echoing the same point of view, Nicholas Frappell, global head of institutional markets at ABC Refinery in Sydney, said gold would benefit from troubles in crypto. “Gold will benefit going forward from the problems in crypto, with the sudden decline in confidence in the crypto ecosystem,” he said.

Notably, gold sentiment is also bullish in the short term. As of now, gold is trading close to its best levels in five months, above $1,800. Moreover, optimism around China reopening and dovish Fed expectations could further pave the way for a gold rally.

Meanwhile, Bitcoin is pretty steady at the moment. The flagship cryptocurrency has been hovering around the $17,000 mark for the past two weeks since the collapse of FTX. As of now, the coin is trading at $17,305.42, up by 1.8% over the past day. The total crypto market cap stands at just over $900 billion.

FTX Blowout Could Drop BTC to $5,000 and Shift Demand to Gold
 

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FTX Blowout Could Drop BTC to $5,000 and Shift Demand to Gold

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Comments (3)
DowntownЧворак
DowntownЧворак Dec 08, 2022 10:35AM ET
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Standard Chartered has no clue what are they talking about. That is a conclusion after this "prediction". We're talking about once in a millenia innovation for the better, staring everyone in the face, yet not everyone can see it. It's like in a times of goods exchange and money came around, I bet people took very slowly to understanding a concept and most dinosaurs, like Bitcoin haters today, never did. Let them trade in goats and cattle. Their descendants will talk of them with pitty of great chance missed.
DowntownЧворак
DowntownЧворак Dec 08, 2022 10:20AM ET
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Standard Chartered has no clue, that has to be a conclusion after this "prediction".
Dec 07, 2022 1:32AM ET
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Nice try i dont think so. Dream number it will stay above 10k
 
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