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Analysts from Deutsche Bank forecast Bitcoin (BTC) rebounding to $28,000 by December 2022 as the cryptocurrency market continues to grapple with gloomy times.

Bitcoin and the wider cryptocurrency markets have endured a tough six months, with the value of BTC, in particular, enduring its worst quarter in 10 years. Macroeconomic conditions around the world have played a role, with stagnating markets and fears of inflation driving conventional stock markets and their crypto-counterparts down to painful lows.

A report from Deutsche Bank analysts Marion Laboure and Galina Pozdnyakova provides an interesting perspective on the medium-term outlook for BTC. Their insights suggest that cryptocurrency markets have mirrored movements of the Nasdaq 100 and S&P 500 since late 2021.

The pair believe that the S&P will rebound to its January levels and that Bitcoin’s correlation to the index could result in a 30% increase in value from current levels midway through 2022. This would see BTC back up to the $28,000 mark.

Related: Better days ahead with crypto deleveraging coming to an end — JPMorgan

The prediction may quell some of the fear and uncertainty swirling in the space, but the recovery of cryptocurrency markets is not so clear cut. Laboure and Pozdnyakova highlighted the recent collapse of the Terra ecosystem and the Celsius debacle and their influence on markets as exacerbating factors:

“Stabilizing token prices is hard because there are no common valuation models like those within the public equity system. In addition, the crypto market is highly fragmented. The crypto freefall could continue because of the system’s complexity.”

A separate investor note from JPMorgan suggests that the crypto ecosystem may already be in recovery. While firms like hedge fund Three Arrows Capital became insolvent after failing to meet margin calls from investors amid the crypto market crash, other industry players have propped up the ecosystem:

“The current deleveraging cycle may not be very protracted given the fact that crypto entities with the stronger balance sheets are currently stepping in to help contain contagion and that venture-capital funding, an important source of capital for the crypto ecosystem, continued at a healthy pace in May and June.”

The note also highlighted the relatively healthy amount of venture capital investment into cryptocurrency firms over the past two months — to the tune of $5 billion. This represents a $3.4 billion increase from the same period in 2021.