- VanEck, an investment giant, believes Bitcoin miners will go bankrupt despite a slowdown in the Federal Reserve’s liquidity tightening measures.
- This goes against the overall outlook on Bitcoin which turned bullish after the US inflation report showed a slowdown in price increases.
- Experts at VanEck have predicted an 82% drawdown in Bitcoin price from its all-time high of $69,000, to a target at $12,000.
VanEck, a global investment manager, has a bearish outlook on Bitcoin despite slowing inflation and monetary policy tightening by the US Federal Reserve. Experts at VanEck believe Bitcoin could nosedive to the $12,000 level with the recent wave of miner bankruptcies.
VanEck expects an 82% drawdown in Bitcoin price from its all-time high
VanEck, a US asset manager and investment giant, is bearish on Bitcoin despite the recent US inflation report. The US Bureau of labor statistics released the inflation report on Tuesday, fueling a bullish outlook among risk asset holders and crypto traders.
The report showed a slowdown in inflation and led to expectations the US Federal Reserve will slow the pace of its liquidity tightening measures. This should lead to a weaker US Dollar and affirm a bullish narrative for Bitcoin and crypto.
In contrast to the conclusion from the US inflation report, experts at VanEck argue that Bitcoin price could witness a massive drawdon. Matthew Sigel, head of digital assets research at VanEck told Coindesk,
Bitcoin will test $10,000-$12,000 in Q1 amid a wave of miner bankruptcies, which will mark the low point of the crypto winter.
Bitcoin miners have been hit by declining profitability and are caught between rising operational costs and the bear market. Since miners’ profitability is closely tied to Bitcoin prices, VanEck believes a wave of miner bankruptcies could increase the selling pressure on BTC.
Bitcoin miner bankruptcies could push BTC prices lower
Bitcoin miners were hit by declining profitability since the beginning of 2022. Miners’ sell Bitcoin rewards to cover their operation costs and the increasing cost of electricity and bleeding BTC price has dented their profit-making ability.
Miners solve complex mathematical puzzles to verify transactions on the blockchain. Based on data from crypto intelligence platform Glassnode, the total BTC balance held by miners in their wallets has declined by nearly $444 million or 25,000 Bitcoin since July 2022.
This indicates a rising trend of miners cashing out their Bitcoin rewards as companies engaged in mining face a crunch. VanEck predicted restructuring, mergers and bankruptcies among miners and mining companies in Q4 2022 and Q1 2023. This is expected to increase pressure on Bitcoin price and BTC could plummet to $10,000 to $12,000 level.
A decline to $12,000 would mark an 82% drawdown in Bitcoin price from its all-time high of $69,000.
52kskew, a technical analyst, holds an opposing view on Bitcoin price. The expert argues that BTC could target $18,400 after testing resistance at $17,500.
BTC/USD price chart
Bitcoin’s first strong break above the 200-day Simple Moving Average (200-day SMA) since October 25 is a bullish indicator for the asset’s price.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended Content
Editors’ Picks
Polygon joins forces with WSPN to expand stablecoin adoption
WSPN, a stablecoin infrastructure company based in Singapore, has teamed up with Polygon Labs to make its stablecoin, WUSD, more useful in payment and decentralized finance.
Coinbase envisages listing of more meme coins amid regulatory optimism
Donald Trump's expected return to the White House creates excitement in the cryptocurrency sector, especially at Coinbase, the largest US-based crypto exchange. The platform is optimistic that the new administration will focus on regulatory clarity, which could lead to more token listings, including popular meme coins.
Cardano's ADA leaps to 2.5-year high of 90 cents as whale holdings exceed $12B
As Bitcoin (BTC) gets closer to the $100,000 mark for the first time — it crossed $99,000 earlier Friday — capital is rotating into alternative cryptocurrencies, creating a buzz in the broader crypto market.
Shiba Inu holders withdraw 1.67 trillion SHIB tokens from exchange
Shiba Inu trades slightly higher, around $0.000024, on Thursday after declining more than 5% the previous week. SHIB’s on-chain metrics project a bullish outlook as holders accumulate recent dips, and dormant wallets are on the move, all pointing to a recovery in the cards.
Bitcoin: Rally expected to continue as BTC nears $100K
Bitcoin (BTC) reached a new all-time high of $99,419, just inches away from the $100K milestone and has rallied over 9% so far this week. This bullish momentum was supported by the rising Bitcoin spot Exchange Traded Funds (ETF), which accounted for over $2.8 billion inflow until Thursday. BlackRock and Grayscale’s recent launch of the Bitcoin ETF options also fueled the rally this week.
Best Forex Brokers with Low Spreads
VERIFIED Low spreads are crucial for reducing trading costs. Explore top Forex brokers offering competitive spreads and high leverage. Compare options for EUR/USD, GBP/USD, USD/JPY, and Gold.