Standard Chartered predicts that bitcoin could drop to $5,000 in 2023 as part of a study of potential market surprises next year.

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Bitcoin prices started the week with a sudden and sharp drop as investors awaited a major Fed policy decision and digested concerns over Binance.

bitcoin It was last down more than 3 percent at $29,121.60, according to Coin Metrics. Earlier, it fell as low as $28,995.02, its lowest level in more than a month.

Although the move coincided with a report in the Wall Street Journal, the reason behind the sharp drop was unclear Report Adding to recent anxiety among Binance investors. Specifically, CEO Changpeng Zhao reportedly said in private conversations in 2019 that Binance affiliates accounted for some of the trading volume before and after the launch of its U.S. trading arm. Some people question whether this behavior constitutes a “wash trading” aimed at inflating trading volume.

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Bitcoin fell sharply Monday morning.

Binance is the largest cryptocurrency exchange in the world. The company was sued by the SEC last month and is at the heart of a Justice Department investigation that could end with a consent order or a settlement, CNBC previously reported. Federal prosecutors have been weighing anti-money laundering violations and sanctions evasion charges that would make it difficult for Binance or founder Zhao to continue obtaining a license to operate.

However, not everyone is convinced that Binance’s story will change significantly.

“You can probably attribute it to technology or money flows,” said Callie Cox, an analyst at investment firm eToro. “$30,000 is a lot of money, and it makes sense for bitcoin investors to be more nervous at that level. The recovery doesn’t always go in a straight line.”

Elsewhere, investors were also eyeing the Federal Reserve’s actions at the conclusion of its two-day meeting on Wednesday.

“Bitcoin has remained in a tight range for a little over a week and is likely to remain so until the end of this week’s FOMC meeting,” said Yuya Hasekawa, a cryptocurrency market analyst at Japanese bitcoin exchange Bitbank. “Markets have almost fully priced in another 25 basis point rate hike from the Fed this week, and are keeping a close eye on whether they will hike again before the end of the year as the FOMC’s previous economic outlook suggested.”

In 2022, the industry is already rife with some negative catalysts as interest rate hikes lead to lower bitcoin prices. Despite bitcoin’s recent strength and stock market gains, recession fears remain as traders weigh the lagged effects of rate hikes against recent signals of an economic slowdown.

“We haven’t seen PCE for June yet…it’s unlikely they will rush into a decision to stop rate hikes until more data comes in and more confidence that inflation is coming down,” Hasegawa added. “This means FOMC rate decisions may continue ‘in real time’ and Bitcoin may not manage to break through $31,500 for some time.”

—CNBC’s Rohan Goswami contributed reporting.

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