Matthew Sigel, head of digital assets research at New York fund manager VanEck, has some fairly hot takes to share in his 11 Crypto Predictions for 2023 blog post.
Bitcoin (BTC), reckons Sigel, could plummet as low as US$10,000 in the first quarter, representing a further 45% of losses following a year that saw the benchmark crypto asset plummet over 60% in a crushing bear market.
But the second half of 2023 could offer some respite for HODLers, with a potential bull run to US$30,000 contingent on lower inflation and easing energy concerns.
Sigel’s BTC price predictions hold some weight given wider economic trends.
Bitcoin specifically has been sensitive to interest rate hikes from the major central banks, but recent trends have pointed to an easing of monetary policy from the US Federal Reserve and the Bank of England, although The European Central Bank remains mired in overly sticky inflation concerns.
In recent days, BTC has enjoyed bullish support from investors with a risk-on appetite, and a broader wing away from jumbo rate hikes could provide a strong catalyst.
Miners to go bankrupt
“With Bitcoin mining largely unprofitable given recent higher electricity prices and lower Bitcoin prices, we predict that many miners will restructure or merge,” predicted Sigel.
Despite being a grim prospect for stakeholders, his prediction is all but a given.
Crypto mining companies have universally seen their valuations tank due to a combination of soaring energy costs, plummeting digital asset prices, and record-high bitcoin mining difficulty, all of which have significantly impacted bottom lines.
VanEck’s own Digital Assets Mining ETF, which tracks the price of the Global Digital Assets Mining Index (which itself tracks the performance of companies deriving at least half their earnings through crypto mining) is down nearly 50% across the past three months.
Bankruptcy protection rumours have dogged Nasdaq-quoted miner Core Scientific Inc, while Argo Blockchain PLC (LSE:ARB, OTCQX:ARBKF, NASDAQ:ARBK, ETR:0XP) told the London Stock Exchange this week that it “is at risk of having insufficient cash to support ongoing business operations within the next month”.
SEC to win against Ripple Labs
Ripple Labs, developer of the world’s sixth-largest cryptocurrency XRP, has been locking horns with the SEC since 2020, when SEC head and crypto permabear Gary Gensler accused the decentralised payment network of raising US$1.3bn through an unregistered digital asset securities offering.
Sigel’s prediction of an SEC victory is at odds with the broader consensus that Ripple Labs has the upper hand, particularly given the widespread industry support Ripple Labs has gained.
But Sigel points to a recent victory for the SEC in a similar case against blockchain-based filesharing protocol LBRY as proof that Ripple Labs’ victory is far from certain.
In a similar vein to its complaint against Ripple Labs, the SEC’s March 2021 complaint against LBRY pointed to its “failure to register an offering of securities pursuant to the Securities Act of 1933”.
“With this case as precedent, we have lowered our probability of a Ripple victory materially,” wrote Sigel.
A ruling in favour of the SEC could have drastic consequences not just for Ripple Labs, but for the cryptocurrency market as a whole, severely limiting crypto companies’ ability to conduct public token offerings for fear of securities law charges.
Gensler out?
Despite a potential victory against Ripple Labs, Sigel predicts that Gary Gensler will step down as head of the SEC.
Gensler is facing scrutiny over his apparent failure to protect US citizens from the FTX collapse.
Minnesota representative Tom Emmer called on Gensler to “testify before Congress and answer questions about the cost of his regulatory failures” in a December 9 Tweet.
Emmer even suggested that Gensler knew of FTX’s fraudulent operations from inception.
So @GaryGensler knows that FTX was fraudulent from its inception.
This is egregious considering he had more meetings with Bankman-Fried than anyone in the space to discuss a crypto regulatory framework designed to benefit FTX alone.
He will be held accountable. pic.twitter.com/LkkOMfc5TP
— Tom Emmer (@RepTomEmmer) December 13, 2022
Although Emmer’s statements are borderline hyperbolic, Gensler is facing genuine scrutiny from both sides of the aisle.
Democrat Ritchie Torres has asked the US Government Accountability Office (GAO) to conduct a review of the SEC’s failure to protect the public from “the egregious mismanagement and malfeasance of FTX.”
“If the SEC had done the due diligence of thoroughly investigating the financials of FTX, there would have been a greater likelihood of exposing the crypto exchange for what it truly is: a house of cards built on monopoly money printed out of thin air,” wrote Torres.
A few more predictions
Some of Sigel’s other 2023 predictions include:
- Financial institutions will tokenize more than $10B in off-chain assets
- Brazil will emerge as one of the most crypto-friendly countries
- Twitter will bolster its payment offerings with state money licenses
- A new decentralized stablecoin will reach $1B in market cap