Crypto and banks don’t go well with each other. That was the typical picture a few years ago. But those times are long gone and banks are highly interested in what is happening in the crypto market and especially with Bitcoin. From time-to-time banks are also making their analysis available to the public and reveal what kind of scenario they think could possibly play out.

Last week two analysts from Deutsche Bank discussed a scenario where Bitcoin could reach $28.000 by the end of 2022.

Correlation is king, or is it?

According to a report from BNN Bloomberg, two analysts from Deutsche Bank figured out that there is a possibility that the stock market would recover and see the highs of January this year. Since December 2021 Bitcoin has been highly correlated to the Nasdaq 100 and the S&P 500.

If the projections for the stock market should come true and the correlation between BTC and stocks continues, then the Bitcoin price could also see an increase. Therefore, the analysts concluded that BTC could rise up to $28.000 at the end of the year 2022.

Judging from the current price action, this seems to be a realistic goal. Still, a looming energy crisis, the war in Ukraine, high inflation, and the possibility that Covid could strike again in winter 2022 are risks that shouldn’t be underestimated. All of these things could possibly impact the stock market and if Bitcoin remains correlated, this could lead to a more difficult situation.

Correlation is a revelation

The most important thing about the findings of the analysts is the fact that Bitcoin is correlated. For many years BTC has been discussed as an uncorrelated asset that would allow investors to diversify and hold a value that is not following the stock market.

This has changed and as long as BTC stays correlated this will also have an impact on whether it can serve as an inflation hedge or not. Meaning that if correlation ends and Bitcoin is going to decouple from stocks, we might see the effect that many Bitcoiners are wishing for.

They believe that BTC is the hardest asset on earth and digital property that at some point will rise in value compared to the Dollar or Euro which both get heavily inflated. Bitcoin on the other hand has fixed supply of 21 million BTC that will ever come into existence.