Bitcoin (BTC) price could drop as low as $13,000, strategist warns

If past crypto bubbles are anything to go by, bitcoins could be about to fall much further.

That’s according to one strategist, who warns that the world’s top cryptocurrency is likely to drop to $13,000, down nearly 40% from current levels.

“We would still sell these types of cryptocurrencies in this environment,” Ian Harnett, co-founder and chief investment officer of Absolute Strategy Research, told CNBC’s “Squawk Box Europe” on Tuesday.

“It’s really a game of liquidity. What we’ve found is that it’s not a currency or a commodity and certainly not a store of value.”

Explaining his bearish call, Harnett said that past crypto rallies show that bitcoin tends to drop around 80% from all-time highs. In 2018, for example, the cryptocurrency fell nearly $3,000 after peaking near $20,000 in late 2017.

Bitcoin hit an all-time high of nearly $69,000 at the peak of the 2021 crypto frenzy. In 2022, it is moving in the opposite direction.

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Such a drop in 2022 “would take you back to around $13,000,” a “key support area” for the token, according to Harnett. Bitcoin has gone to a record close to $69,000 at the peak of the 2021 crypto frenzy.

“In a world of abundant liquidity, bitcoins in this world are doing well,” Harnett said. “When that liquidity is removed – and central banks are doing that right now – then you see those markets under extreme pressure.”

The crypto world is on edge as investors grapple with the impact of rising interest rates on assets that have thrived in an era of ultra-loose monetary policy.

Last week, the Federal Reserve raised its key rate by 75 basis points, its biggest hike since 1994. The Fed’s move was followed by similar moves by the Bank of England and the Swiss National Bank.

This has wreaked havoc on digital assets. The combined value of all cryptocurrencies has plunged over $350 billion in the past two weeks. Bitcoin was trading at a price of $21,393 on Tuesday, up 6% in the past 24 hours but still down more than 50% year-to-date.

The crypto market was already on shaky ground before the Fed’s rate hike last week, with traders troubled by the $60 billion collapse of the popular stablecoin terraUSD and its sister token luna.

To complicate matters further, the decline in the value of a derivative token designed to be exchanged one-for-one for ether has exacerbated financial difficulties with major industry players such as Celsius and Three Arrows Capital.

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