If previous crypto booms are any indicator, bitcoin may be on the cusp of falling even worse. According to a strategist, the world’s top cryptocurrency might go as low as $13,000, a decline of about 40% from present levels.
“In this climate, we would continue to sell these sorts of cryptocurrencies,” said Ian Harnett, co-founder and chief investment officer of Absolute Strategy Research.
” It’s really a liquidity game. We learned that it is neither a currency nor a commodity, let alone a store of value. “
Harnett explained his pessimistic statement by stating that previous crypto rallies have shown that bitcoin drops roughly 80% from all-time highs. After reaching $20,000 in late 2017, the cryptocurrency fell to roughly $3,000 in 2018.
According to Harnett, such a dip in 2022 ” would take you back to approximately $13,000,” an “important support zone” for the asset. At the height of the 2021 craze, Bitcoin reached an all-time high of roughly $69,000.
“In this world of abundant liquidity, bitcoin is performing well,” Harnett added. “When that liquidity is withdrawn – and central banks are doing so right now – you see enormous pressure on those markets.”
Crypto fundamentals are already at half mast.
The crypto world is on edge as investors consider the impact of rising interest rates on assets that prospered during a period of ultra-easy monetary policy.
The Federal Reserve boosted interest rates, and the Bank of England and the Swiss National Bank followed suit. This has had an impact on digital assets, as the total value of all cryptos has dropped by more than $350 billion in the last two weeks.
Furthermore, the market was reeling from the $60 billion collapse of stablecoins TerraUSD and LUNA. Furthermore, the decline in the value of stEth, which can be exchanged for ether, has compounded the financial difficulties of big participants in the industry such as Celsius and Three Arrows Capital.
