If the past bubble of cryptography goes by Bitcoin It can fall much.
This is almost 40% down from current levels, according to one strategist who warns that the world’s best cryptocurrencies are likely to drop to $ 13,000.
“We will continue to sell this type of cryptocurrency to 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 liquidity play. What we’ve found is that it’s neither a currency nor a commodity, and it’s certainly not a valuable store.”
Harnett explained his bearish call, saying that past crypto rallies have shown that Bitcoin tends to fall about 80% from its all-time high. For example, in 2018, cryptocurrencies plummeted to nearly $ 3,000 after peaking at nearly $ 20,000 in late 2017.
Bitcoin recovered to a record high of nearly $ 69,000 during the height of the crypto frenzy in 2021. In 2022, it moved in the opposite direction.
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According to Harnet, such a fall in 2022 will “return to about $ 13,000,” the token’s “major support area.”Bitcoin Record high At the height of the crypto frenzy in 2021, it will be close to $ 69,000.
“In a liquid world, Bitcoin in this world works,” Harnett said. “When that liquidity is deprived-and that’s what central banks are doing now-and you’ll see those markets under extreme pressure.”
The world of cryptocurrencies is at stake as investors are tackling the impact of high interest rates on assets that flourished in the era of ultra-loose monetary policy.
Last week, the Federal Reserve raised the benchmark lending rate by 75 basis points. This is the largest single increase since 1994. The Fed’s decision was followed up with similar moves from the Bank of England and the Swiss National Bank.
It has hit digital assets hard. The total value of all cryptocurrencies has plummeted by more than $ 350 billion in the last two weeks. Bitcoin was trading at a price of $ 21,393 on Tuesday. It has risen 6% in the last 24 hours, but is still declining by more than 50% year by year.
Before the Fed’s rate hike last week, the crypto market was already volatile and traders said $ 60 billion collapse Of the popular stablecoin terraUSD and its sister token Luna.
To complicate matters, the decrease in the value of a Derived tokens designed for one-on-one exchange with ether Have Deteriorated financial problems With major industry players such as Celsius and Three Arrows Capital.