Standard Chartered predicts that Bitcoin will fall to $5,000 in 2023 as part of its research on potential market surprises for the next year.
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Bitcoin prices fell sharply to start the week as investors awaited a key Federal Reserve policy decision and digested concerns surrounding Binance.
Bitcoin was last down 3% at $29,121.60, according to CoinMetrics. Earlier, it fell to $28,995.02, its lowest level in more than a month.
While the move coincided with a recent Wall Street Journal report fueling investor anxiety around Binance, the reason behind the sharp drop is unclear. Specifically, CEO Changpeng “CZ” Zhao reported in a private conversation in 2019 that Binance affiliates accounted for a portion of the trading volume when the US trading division was launched. There are questions about whether this activity constituted “wash trading” aimed at increasing volume.
Bitcoin fell sharply on Monday morning.
Inance is the world’s largest crypto exchange. It was sued by the Securities and Exchange Commission last month and is at the center of a Justice Department investigation that could end in a consent order or settlement, CNBC previously reported. Federal prosecutors are weighing anti-money laundering violations and sanctions evasion charges, charges that could make it difficult for Binance or founder Zhao to continue obtaining licenses to operate.
However, not everyone is convinced that a big move can be made in the Binance story.
“You can probably chalk it up to technicals or flows,” said Callie Cox, an analyst at investment firm eToro. “$30,000 is a big deal, and it makes sense that Bitcoin investors are getting more nervous at these levels. Recoveries won’t always be a straight line.”
Elsewhere, investors are watching what the Federal Reserve does at the conclusion of its two-day meeting on Wednesday.
“Bitcoin is still fluctuating within a narrow range for more than a week and will continue to do so until the conclusion of this week’s FOMC meeting,” said Yuya Hasegawa, crypto market analyst at Japanese bitcoin exchange Bitbank. “Markets have almost fully priced in another 25 basis point rate hike by the Fed this week, and are watching closely to see if they’re going to implement another one later this year, as suggested by the FOMC’s previous economic outlook.”
The rate hike helped lower the price of Bitcoin in 2022, which was already fraught with several negative catalysts for the industry. Despite recent resistance in bitcoin and rally in equities, bearish concerns remain as traders gauge the lagged effect of rate hikes and recent signals of a slowdown in the economy.
“We haven’t seen June’s personal consumption expenditure yet… They won’t rush to make a decision to hold off on rate hikes until we get more data,” Hasegawa added. “This means that the FOMC’s rate decisions will henceforth remain ‘live’ and Bitcoin will not successfully break out of $31,500 for another time.”
—CNBC’s Rohan Goswami contributed reporting.