Deutsche Bank analysts Marion Laboure and Galina Pozdnyakova predict bitcoin could hit $28,000 by the end of 2022 as it trades closely with US stocks.
Since November 2021, cryptocurrencies have been increasingly closing in on market sentiment, including the Nasdaq 100 and S&P 500. Analysts Laborse and Pozdnyakova expect the S&P to return to January prices. Due to the growing similarity, they also conclude that bitcoin could follow the S&P recovery to $28,000.
Laborse and Pozdnyakova also likened digital currencies to diamonds rather than gold. They claim that both of these assets are heavily traded. Therefore, their prices will always rise in the long term, allowing them to act as hedges against inflation.
“By marketing an idea rather than a product, they have built a strong foundation for the $72 billion a year diamond industry which they have dominated for eighty years. What is true for diamonds is also true for many goods and services, including bitcoins.”
The duo also briefly mentioned market volatility and argued that token prices will stabilize once standard valuation models are adopted.
Commercialization of bitcoin
Based on their previous statements, it seems bitcoin’s popularity is the main reason why Deutsche Bank is taking it seriously.
The bank claimed that bitcoin was on the way to become the gold of the 21st century in September 2021. The bank gave three reasons to support this claim:
- People have always invested heavily in assets not controlled by governments.
- Bitcoin’s supply and demand balance was rare enough to protect its long-term value.
- Bitcoin is used primarily for investment purposes and has proven its worth as an inflation hedge.
The German bank recently addressed the effects of bitcoin’s popularity on its prices. Referring to adoption levels, Deutsche Bank said more people will join the cryptocurrency industry once the proper regulations are in place. As a result, prices are expected to soar, just as they have in the diamond industry for the past 50 years.
Deutsche Bank is not the only financial giant to have discovered the link between bitcoin and US stocks.
Bloomberg analyst Mike McGlone also pointed to the same relationship in early June 2022. At the time, bitcoin and Nasdaq broke their important support levels at the same time. In contrast, the S&P 500 and bitcoin have since returned to their 100-week averages.
Highlighting the parallelism between the three, McGlone said:
“They are all related. […] When we see that the foundations are formed, which is going to happen, it’s just a matter of when and where Bitcoin and Ethereum should come out on top.”
In the case of Bitcoin, McGlone mentioned increasing levels of adoption and decreasing supply to say that Bitcoin price could reach $100K by 2023.
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