Three macroeconomic factors could prompt the popular bitcoin to plunge 76% from current levels to $10,000 by 2023, says Barry Bannister, a managing director and market strategist. He highlighted that BTC is facing three macro headwinds that is influencing its price.
The three macro headwinds are global money supply, equity risk premium of the S&P 500 and the 10-year US Treasury yield. Bannister said S&P 500 and bitcoin move with global money translated into dollar, but BTC moves more. With the dollar strengthening, the global M2 money growth will slow. This could have an impact on US financial conditions. And bitcoin could fall if the US financial conditions tighten.
He believes bitcoin likes a lower equity risk premium. As such, investors need to be be watchful of the Fed raising (bearish) equity risk premium or lowers (bullish) equity risk premium. Bannister highlighted that if bitcoin hit by gold falls to the low end of its end, BTC could dive to $10,000 by 2023. He says the Federal Reserve’s tightening, in the form of interest rate hikes, and reduction in its balance sheet could have a negative impact on Bitcoin’s price.
The market strategist explained that BTC is in a broad trading range bounded by year-to-year intra-day levels. There is greater downside risk in 2023 if the Federal Reserve continues to normalize policy in a standard two-year tightening cycle.
The popular crypto is already down by 39% from its record November-high and plunging further to $10,000 means a total drawdown of as much as 86%. The crypto market cannot afford such a downturn.