Bitcoin price decline to lows of $10,000 by next year amid Federal Reserve monetary tightening, said Stifel strategist Barry Bannister.
Barry Bannister, the Managing Director and Chief Equity Strategist at wealth management firm Stifel believes Bitcoin could plunge towards $10,000 by 2023.
In a note to Insider, Bannister points to global money supply, the real 10-Year yield, and equity risk premium as three macro factors that could negatively impact BTC price throughout the year and into 2023.
These factors, according to the strategist, come into play alongside the US Federal Reserve’s monetary tightening and interest rate hikes. The fundamental picture, Bannister notes, suggests a continued drawdown for Bitcoin.
First, Bitcoin’s price could fall if the global money supply dynamics see a strong dollar slow down the global M2 money supply. With BTC and the S&P 500 moving with global money, a tighter US financial policy could see a highly speculative asset as Bitcoin drop sharply.
Another macro factor the Stifel exec pointed to is the real 10-year yield rising as a factor that could hinder Bitcoin. The same would happen if a higher 10-year US Treasury yield pushes gold prices lower.
“If bitcoin divided by gold falls to the low end of its range (Fed tightens) bitcoin could drop to $10,000 by 2023,” the strategist explained.
The third factor according to Bannister is ‘equity premium risk’, which he explains as a function of the Fed’s expected aggressive rate hikes. According to him, the S&P 500 and Bitcoin could break down by 2023 as the US central bank “keeps going’ with rate hikes.
Higher rates would raise the ‘equity risk premium, spelling a bearish outlook for BTC, he noted. On the flip side, a lower equity risk premium would be bullish for the pioneer cryptocurrency.
Bitcoin reached a high of $69,000 in 2021 but has struggled as it trades in tandem with stocks since that peak. Currently, the benchmark crypto asset is down nearly 45% from that all-time high, with the BTC-USD pair trading near $38,455.