Bitcoin could plunge 70% to $5,000, Standard Chartered predicts, in possible 2023 'surprise'

Bitcoin could drop to $5,000 next year in a market surprise that investors are under-pricing, according to Standard Chartered.

If that level is reached, it would mark a roughly 70% plunge from Monday's price of just over $17,000 for one bitcoin.

In a note entitled "The financial-market surprises of 2023," Standard Chartered outlined a number of possible scenarios that "we feel are under-priced by the markets."

"Yields plunge along with technology shares, and while the Bitcoin sell-off decelerates, the damage has been done. More and more crypto firms and exchanges find themselves with insufficient liquidity, leading to further bankruptcies and a collapse in investor confidence in digital assets," Eric Robertsen, global head of research at Standard Chartered Bank, said in the note Sunday.

Robertsen said the somewhat extreme scenarios "have a non-zero probability of occurring in the year ahead, and ... fall materially outside of the market consensus or our own baseline views."

Bitcoin has already fallen more than 60% this year after a string of high-profile collapses of projects and companies plagued the industry. The latest and biggest casualty is cryptocurrency exchange FTX which has filed for bankruptcy. Contagion from the fallout of FTX continues to spread through the market.

The drop in bitcoin's price will also coincide with a rally in gold, Robertsen said, arguing the yellow metal could potentially rally 30% to $2,250 per ounce "as cryptocurrencies fall further and more crypto firms succumb to liquidity squeezes and investor withdrawals."

Robertsen says gold could re-establish itself as a safe haven, with investors flocking to the commodity for stability in times of market volatility.

"The 2023 resurgence in gold [also] comes as equities resume their bear market and the correlation between equity and bond prices shifts back to negative," he added.

Standard Chartered's view is not the only bearish outlook on bitcoin. Veteran investor Mark Mobius told CNBC last week that he sees bitcoin falling to $10,000 in 2023 due to rising interest rates and tighter monetary policy from the U.S. Federal Reserve.

However, there are still those who are bullish on bitcoin. Venture Capitalist Tim Draper told CNBC on Saturday that he thinks bitcoin can hit $250,000 next year.