Deutsche Bank – Cryptocurrency Freefall Will Continue

Cryptocurrency investors have faced brutal months as fears of a recession mount. The price of BTC, for example, has been feeling the brunt and has dropped from $45,000 in early April to levels below $18,000 in June.

Deutsche Bank – bloodbath should continue

Meanwhile, Deutsche Bank analysts believe cryptocurrencies are likely to cause investors more pain. According to the bank, the “bloodbath” in the sector should continue.

This, according to the report, must be due to the complexity of the system surrounding the crypto market. They highlighted above all the collapse of the Terra ecosystem and the collapse of Celsius.

As analysts noted, in the face of this, stabilizing token prices will be a challenge. This is because “there are no common valuation models like those of the public capital system”, they said.

Furthermore, the crypto market is highly fragmented, according to the report. Based on this, the strategists said that speculative trading will involve using different currencies simultaneously. This, on the other hand, increases the effects of the catastrophe.

Analysts believe that the liquidity that currently exists in the markets could disappear, “decreasing investor confidence and increasing the possibility of contagion”.

Unfavorable macroeconomic conditions around the world are also a serious concern for investors.

BTC will recover

According to Deutsche Bank, risky assets such as cryptocurrencies are severely affected by U.S. tightening practices.

“These macro risks are exacerbated by the possibility of a US recession next year,” they point out.

Michael Burry, the investor made famous by the movie The Big Short, also shared a bearish outlook. The hedge fund manager believes the market is currently at the midpoint of a massive correction.

While analysts at the bank expect the cryptocurrency meltdown to continue, it’s not all doom and gloom. They note that the crypto market has moved in tandem with the S&P 500 and Nasdaq since late last year. So a rising tide will lift everyone up.

The bank believes the S&P will recover to January levels. And just like traditional markets, cryptocurrencies could rise over 31% when the market warms up again.

“That would make the BTC safely back above the $28,000 region by the end of the year,” they concluded.