Analysts for multinational investment bank and financial services company UBS Group AG are warning that the current price slump for Bitcoin could be the start of another “crypto winter.”
According to a report by Insider, the crypto markets could be in for another “winter” of price crashes that will take years to recover to the last all-time high. Analysts at UBS recently warned that the current correction may be the start of a bear market, similar to what followed slumping crypto prices in the beginning of 2018.
The client note, led by James Malcolm, pointed to interest rate hikes from the Federal Reserve in 2022 that are denting the appeal for cryptocurrencies. UBS argued that rising interest rates challenge the notion that Bitcoin is a good alternative currency or store of value.
The note also pointed to the technology’s list of a shortcomings, such as transaction speed and a lack of scalability, in an addition to the growing perception that regulation will stymie the development of crypto.
Malcolm said the combination of factors likely pointed to the current price correction for crypto as being a herald of worse to come. The analysts wrote that central bank efforts to curb inflation would tarnish Bitcoin, and that stimulus throughout 2020 and 2021 likely played a large role in Bitcoin’s meteoric price rise.
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