If past cryptocurrency bubbles are something you can go through, bitcoin it can fall much more.
That’s according to a strategist who warns that the world’s best cryptocurrency is likely to reach $ 13,000 – a nearly 40 percent drop from current levels.
“We will still be selling 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 neither a currency nor a commodity, and it’s certainly not a store of value.”
Explaining his bearish call, Harnett said past crypto-rallies showed Bitcoin’s trend of falling by about 80 percent from its all-time high. In 2018, for example, the cryptocurrency fell close to $ 3,000 after reaching a peak of nearly $ 20,000 at the end of 2017.
Bitcoin has risen to a record high of nearly $ 69,000 in the midst of crypto madness in 2021. In 2022, it is moving in the opposite direction.
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Such a decline in 2022 will “bring you back to about $ 13,000”, a “key area of support” for the token, according to Harnett. Bitcoin has grown to a record high of nearly $ 69,000 in the midst of crypto madness in 2021
“In a world where liquidity is plentiful, bitcoins in this world are doing well,” Harnett said. “When this liquidity is taken away – and central banks are doing it now – then you see that these markets are under tremendous pressure.
The crypto world is on the brink as investors struggle with the impact of higher interest rates on assets that thrive in an era of extremely free monetary policy.
Last week, the Federal Reserve raised its key lending rate by 75 basis points, its biggest one-off increase since 1994. The Fed’s decision was followed by similar moves by the Bank of England and the Swiss National Bank.
This has affected digital assets. The total value of all cryptocurrencies has fallen by more than $ 350 billion in the last two weeks. Bitcoin was trading at $ 21,393 on Tuesday, up 6% in the last 24 hours, but still down more than 50% since the beginning of the year.
The crypto market was already on shaky ground before the Fed’s interest rate hike last week, with traders frustrated by $ 60 billion collapse of the popular stablecoin terraUSD and its sister token luna.
To further complicate matters, the decline in the value of a derivative token designed to be one-to-one, buying for ether face exacerbated financial problems with major players in the industry such as Celsius and Three Arrows Capital.