Deutsche Bank: Crypto Freefall Could Continue Because of the Macroeconomics’ Complexity
- Deutsche Bank analysts predict a rise in inflation across the US to 9.1 percent by Q4 2022.
On Wednesday, a report by leading financial service provider, Deutsche Bank (DB), states that the crypto space’s complex nature means that the crypto price freefall won’t stop anytime soon. The bank explained that the lack of valuation models for the crypto market as it obtains in the public equity system makes it almost impossible to stabilize token prices.
Another factor making token stabilization difficult is the highly disjointed nature of the crypto market. The bank added that there would be more spillover effects.
Deutsche Bank on Crypto Market
Any tightening measures by the central bank will likely affect all cryptocurrencies, including BTC. The reason is that these cryptos are high-risk, speculative assets. Unfortunately, there are tightening measures ahead. The US Federal Reserve isn’t done with increasing rates.
Also, the European Central Bank is just starting its rate increase. In addition, the Bank of Japan (BoJ) is struggling to contain market pressures threatening even inflation-proof markets. The effects of these macro factors are exaggerated as analysts fear that a recession will occur in the US soon.
Also, many investors are no longer willing to invest in high-risk assets such as cryptos due to these macro-economic factors. Either of these factors is a threat to the struggling crypto market. Thus, any additional macro shock could cause further freefall in crypto prices.
This crypto price freefalls could further expose the DeFi ecosystem to more risks. Deutsche Bank analysts predict a rise in inflation across the US to 9.1 percent by Q4 2022. Also, they predicted that the US economy would be in full-blown recession by next year.
Many economists are comparing the current macroeconomic trends to the “stagflation winds” of the ’70s when the energy sector was the most booming industry. The bank noted that bitcoin’s price wouldn’t drop as low as the energy prices of the ’70s even through peak inflation levels.
If that should happen, Bitcoin can truly be considered the next digital oil. The DB report also remarked that there had been a similar correlation between digital assets, including bitcoin (BTC), the S&P 500 stock index, and Nasdaq in the last couple of months.
Hence, the bank predicts BTC’s price could rise to $28,000 by December 2022. If BTC’s price reaches that level by December, it would have made a 32 percent rally from its present price. However, it would still be nearly 50 percent off its peak price from last November.
Rebecca is a Senior Staff Writer at BitcoinWisdom, working hard to bring you the latest breaking news in the cryptocurrency market. In the words of Elon Musk “Buy stock in several companies that make products & services that *you* believe in. Only sell if you think their products & services are trending worse. Don’t panic when the market does. This will serve you well in the long-term.”
