According to Standard Chartered, markets are undervaluing a number of “surprise” situations for the upcoming year. The list includes gold rising to a new record high of $2,250 per ounce and Bitcoin falling below $5,000.
According to Standard Chartered in a note titled “The Financial-Market Surprises of 2023,” Bitcoin might experience severe losses in 2019 as the technology industry continues to struggle and the cryptocurrency market experiences more bankruptcies and contagion risks.
Bitcoin would drop 70% from its current values of around $17,000 if it were to sell off to $5,000. Following several significant downturns caused by the failure of various cryptocurrency projects and businesses, including the most recent bout of volatility brought on by the collapse of FTX, Bitcoin has already lost 63% of its value this year. The price of Bitcoin reached a record high of $69,000 just over a year ago.
“Yields fall along with technology stock prices, and even as the Bitcoin sell-off slows down, harm has already been done. More and more cryptocurrency businesses and exchanges are struggling with a lack of liquidity, which has caused more bankruptcies and a decline in investor trust in digital assets “In the note released on Sunday, Eric Robertsen, the global head of research at Standard Chartered Bank, stated.
Another possibility is that when Bitcoin declines, investors may shift their attention from the digital form of gold to the actual metal, causing gold to rise. “As cryptocurrencies fall more and more crypto businesses succumb to liquidity squeezes and investor withdrawals,” according to Robertsen, gold might increase to $2,250 per ounce next year.
This would represent a 26% increase above the present levels. The price of February Comex gold futures was $1,790.70 at the last price, down 1.04% today.
According to Robertsen, rising market turbulence in 2019 might also help gold maintain its status as a safe-haven asset in the face of more market turbulence in 2023. The rise in gold in 2023 coincides with the resumption of the stock market’s bear market and a return to a negative connection between bond and equity prices, the author noted.
Robertsen listed many potentially disastrous “surprise” situations in the note that “are under-priced by the markets.” The situations in question “fall considerably outside of the market consensus or our own baseline assumptions,” he added in further clarification.