How people who watch the market were wrong about bitcoin in 2022

From Tim Draper to top crypto bosses, the market was awash with pundits predicting new record highs for bitcoin in 2022.

In 2022, a new "crypto winter" began, during which many well-known companies went out of business and the prices of digital currencies fell dramatically. Many investors were surprised by what happened this year, which made it harder to predict the price of bitcoin.

There were a lot of experts making wild predictions about where bitcoin would go next. They were mostly optimistic, but a few of them were right when they said that the cryptocurrency would fall below $20,000 per coin.

But many people who follow the crypto market were caught off guard by the year's ups and downs. High-profile company and project failures sent shock waves through the industry.

In May, an algorithmic stable coin called terraUSD, or UST, which was supposed to be worth the same as the U.S. dollar, failed. Its failure brought down terraUSD's sister coin, luna, and hurt companies that had investments in both coins.

Because of its exposure to terraUSD, Three Arrows Capital, a hedge fund that was optimistic about crypto, went into liquidation and filed for bankruptcy.

Then, in November, one of the biggest cryptocurrency exchanges in the world, FTX, shut down. It was run by Sam Bankman-Fried, an executive who was often in the news. The effects of FTX are still being felt in the cryptocurrency industry.

On top of crypto-specific failures, investors have also had to deal with rising interest rates, which have put pressure on risky assets like stocks and crypto.

Since its all-time high of nearly $69,000 in November 2021, Bitcoin's price has dropped by about 75%, and the value of the entire cryptocurrency market has dropped by more than $2 trillion. Bitcoin was worth just under $17,000 on Friday.

NBC reached out to the people behind some of the boldest price calls on bitcoin in 2022, asking them how they got it wrong and whether the year’s events have changed their outlook for the world’s largest digital currency. 

Tim Draper: $250,000 

“I expect a flight to quality and decentralized crypto like bitcoin, and for some of the weaker coins to become relics,” he told CNBC via email.

Bitcoin would need to rally nearly 1,400% from its current price of just under $17,000 for Draper’s prediction to come true. His rationale is that despite the liquidation of notable players in the market like FTX, there’s still a huge untapped demographic for bitcoin: women.

“My assumption is that, since women control 80% of retail spending and only 1 in 7 bitcoin wallets are currently held by women, the dam is about to break,” Draper said.

Nexo: $100,000 

In April, Antoni Trenchev, the CEO of crypto lender Nexo, told CNBC that he thought the world's biggest cryptocurrency could rise above $100,000 "within 12 months." Even though he still has four months to go, Trenchev knows it is unlikely that bitcoin will rise that high anytime soon.

Bitcoin "was on a very positive path," says Trenchev, and more institutions were using it. However, "a few major forces got in the way," such as a buildup of leverage, borrowing without collateral or against low-quality collateral, and fraud.

“I am pleasantly surprised by the stability of crypto prices, but I do not think we are out of the woods yet and that the second and third-order effects are still to play out, so I am somewhat skeptical as to a V-shape recovery,” Trenchev said. 

The entrepreneur says he’s also done making bitcoin price predictions. “My advice to everyone, however, remains unchanged,” he added. “Get a single digit percentage point of your investable assets in bitcoin and do not look at it for 5-10 years. Thank me later.” 

Guido Buehler: $75,000 

Guido Buehler, the former CEO of the Swiss bank Seba, which focuses on cryptocurrencies and is regulated, said on January 12 that his company's "internal valuation model" for bitcoin in 2022 was between $50,000 and $75,000.

Buehler thought that the price would go up with the help of institutional investors.

Bitcoin was worth between $42,000 and $45,000 at the time. In 2022, Bitcoin never got to $50,000.

When CNBC asked the executive, who now runs his own advisory and investment firm, what went wrong with the call, he said that 2022 has been a "year from hell."

"The war in Ukraine in February sent a shock through the world order paradigm and the financial markets," Buehler said, pointing out that the disruption of commodities like oil caused the markets to become more volatile and inflation to rise.

Another major factor was "the realization that interest rates are still the main driver of most asset classes," including crypto. This was a hard blow for the crypto community, which had thought that crypto is not related to traditional assets.

Buehler said that fraud, the lack of risk management in the crypto industry, and the lack of regulation have also had a big effect on prices.

The executive is still optimistic about bitcoin, saying that it will reach $75,000 "sometime in the future," but that it's just a matter of when.

“I believe that BTC has proven its robustness throughout all the crisis since 2008 and will continue to do so.”

Paolo Ardoino: $50,000 

In April, Bitfinex and Tether's chief technology officer, Paolo Ardoino, told CNBC that he thought the price of bitcoin would drop sharply below $40,000 but end the year "well above" $50,000.

"I'm optimistic about bitcoin... At the time, he said, "I'm very optimistic because I see so much going on in this field and so many countries interested in adopting bitcoin."

When the interview took place, bitcoin was worth more than $41,000. Ardoino was right about the first part of his prediction: bitcoin did fall well below $40,000. But it never got better again.

In an email this month, Ardoino said that he still has faith in bitcoin and the blockchain technology that makes it work.

“As mentioned, predictions are hard to make. No one could have predicted or foreseen the number of companies, well regarded by the global community, failing in such a spectacular fashion,” he told CNBC.

“Some legitimate concerns and questions remain around the future of crypto. It might be a volatile industry, but the technologies developed behind it are incredible.”

Deutsche Bank: $28,000 

The link between bitcoin and U.S. stock indexes, especially the tech-heavy Nasdaq 100, has been a major theme in 2022. In June, analysts at Deutsche Bank wrote in a note that the price of bitcoin could reach about $27,000 by the end of the year. At the time the note was written, bitcoin was worth just over $20,000 each.

It was based on the idea that the S&P 500 would jump to $4,750 by the end of the year from its current level of $4,350.

But it's unlikely that call will come.

Marion Laboure, who was one of the people who wrote Deutsche Bank's first report on cryptocurrencies in June, said that the bank now thinks that bitcoin will end the year at around $21,000.

“High inflation, monetary tightening, and slow economic growth have likely put additional downward pressure on the crypto ecosystem,” Laboure told CNBC, adding that more traditional assets such as bonds may begin to look more attractive to investors than bitcoin.

Laboure also said high-profile collapses continue to hit sentiment.

“Every time a major player in the crypto industry fails, the ecosystem suffers a confidence crisis,” she said.

“In addition to the lack of regulation, crypto’s biggest hurdles are transparency, conflicts of interest, liquidity, and the lack of reliable available data. The FTX collapse is a reminder that these problems continue to be unresolved.”

JPMorgan: $13,000 

Nikolaos Panigirtzoglou, a JPMorgan analyst, and his team wrote in a research note on November 9 that the price of bitcoin would fall to $13,000 "in the coming weeks." After the FTX liquidity crisis, they could look back and say that it would lead to a "new phase of crypto deleveraging," which would push prices down.

Analysts said that the cost for miners to make new bitcoins has been a "floor" for the price of bitcoin in the past and that it is likely to go back to a low of $13,000 that was seen in the summer. That's not as far off from the current price of bitcoin as some other predictions, but it's still a lot less than the price on Friday, which was just under $17,000.

A JPMorgan representative said that Panigirtzoglou "is not available to comment further" on his team's prediction.

 

Absolute Strategy Research: $13,000 

Absolute Strategy Research's co-founder and chief investment officer Ian Harnett warned in June that the world's top digital currency could fall as low as $13,000.

Harnett explained his bearish prediction at the time by saying that after crypto rallies in the past, bitcoin had fallen about 80% from its all-time high. In 2018, for example, the token fell from a high of almost $20,000 in late 2017 to almost $3,000.

Harnett's goal is closer than most, but bitcoin would have to drop by another 22% to reach it.

When asked how he felt about the call today, Harnett said he was "very happy to suggest that we are still in the process of the bitcoin bubble deflating" and that a drop of close to $13,000 is still likely.

“Bubbles usually see an 80% reversal,” he said in response to emailed questions.

With the U.S. Federal Reserve likely set to raise interest rates further next year, an extended drop below $13,000 to $12,000 or even $10,000 next can’t be ruled out, according to Harnett.

“Sadly, there is no intrinsic valuation model for this asset — indeed, there is no agreement whether it is a commodity or a currency — which means that there is every possibility that this could trade lower if we see tight liquidity conditions and/or a failure of other digital entities / exchanges,” he said.

Mark Mobius: $20,000 then $10,000

VMark Mobius, who has been an investor for a long time, has probably been one of the most accurate people to predict bitcoin.

In May, when the price of bitcoin was over $28,000, he told Financial News that bitcoin would probably fall to $20,000, then bounce back up, but eventually go down to $10,000.

Bitcoin did fall below $20,000 in June, but it went back up in August before falling again for the rest of the year.

But the goal of $10,000 was not reached.

Mobius told CNBC he forecasts bitcoin to hit $10,000 in 2023.

Carol Alexander: $10,000  

A month after bitcoin's all-time high in December 2021, a professor of finance at Sussex University named Carol Alexander said she thought the price would fall to $10,000 "or even more" in 2022.

At the time, Bitcoin had dropped about 30% from its near $69,000 high. Still, at the time, many people who talked about crypto said that it would go up even more. Alexander was one of the few people who spoke out against the general trend.

“If I were an investor now I would think about coming out of bitcoin soon because its price will probably crash next year,” she said at the time. Her bearish call rested on the idea that bitcoin has little intrinsic value and is mostly used for “speculation.”

Bitcoin didn’t quite slump as low as $10,000 — but Alexander is feeling good about her prediction. “Compared with others’ predictions, mine was by far the closest,” she said in emailed comments to CNBC.

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