On Monday, analysts Barry B. Bannister and Thomas R. Carroll at the equity trading desk of investment bank Stifel, predict in their call of the day that Bitcoin could fall to as low as $12,000 in the coming months.
In the financial market roundup article from MarketWatch, it is mentioned,
Other casualties that Bannister and Carroll expect to see are bitcoin BTCUSD… sensitive to slowing global liquidity and the stronger dollar. The strategists at Stifel see bitcoin falling from around $34,000 to $12,000 if global M2—a measure of the money supply—drops to low-single digits year-over-year, as they expect.
Source: Stifel Estimates, Bloomberg Data
As the global pandemic comes to an end, the M2 supply – or the total amount of “near money” akin to cash, checking deposits, saving deposits, mutual funds, and any less liquid assets – should drop again. From February to August during the pandemic, the M2 supply rose in the US by nearly 3 trillion dollars.
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This large increase reflected the tough economic period for citizens and the Federal Reserve’s actions of cutting interest rates to reduce the impact individuals felt. Now that the pandemic is nearly over, interest rates will go up again, and people could once again begin spending their money instead of investing it.
The price of BTC could see a significant drop as predicted by the analysts at Stifel since people will have less extra cash on hand that could be used to invest in crypto.
BTC Price Continues To Rise?
Although the analysts at Stifel have predicted a bearish trend over the coming weeks, the market does not seem to want to agree. Currently the price of BTC sits at around 36k, well over the 28k low from earlier this month. Even though Bitcoin does somewhat follow the M2 year over year trend, that movement could be short lived. Just because there will be less cash on hand as the pandemic comes to a close, does not mean that new or existing investors will suddenly shy away from BTC and crypto.
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In fact, the more that traditional analysts talk about crypto, the more new investors will see it as viable. With the acceptance of both crypto and blockchain technology, investors will continue to see movement outside of normal trends because of events that these markets have never seen before such as a global pandemic.
But Will The Market Hold?
The crypto market will continue hold as new technology and big business comes into play. Plus, the cryptocurrency market will always see movement when market analyst like Bannister and Carroll from Stifel investment firm talk about the price. Simply having firms like this closely monitoring the price of BTC tells investors that blockchain technology is a force to be reckoned with.