If the previous cryptocurrency bubbles were an example, Bitcoin could fall a lot further. This is supported by an analyst, who warns that the most popular cryptocurrency in the world is likely to fall to $ 13,000, a drop of almost 40% compared to current levels.
“We will continue to sell cryptocurrencies in this environment,” said Ian Harnett, co-founder and chief investment officer of Absolute Strategy Research, according to CNBC.
Explaining his estimate, Harnett said that cryptocurrency rallies in the past show that Bitcoin tends to fall about 80% from its all-time high. In 2018, for example, the cryptocurrency collapsed close to $ 3,000, after reaching the then peak of almost $ 20,000 at the end of 2017.
Such a drop in 2022 “would bring it to about $ 13,000,” according to Harnett. Bitcoin reached the record of almost 69,000 dollars at the peak of the crypto rally in 2021.
“In a world where liquidity is plentiful, Bitcoins are doing well,” Harnett said. “When this liquidity is taken away – and this is what central banks are doing right now – then we see these markets coming under extreme pressure.” The cryptocurrency industry is in turmoil as investors struggle with the impact of higher interest rates.
It is recalled that last week, the US Federal Reserve (Fed) raised interest rates by 75 basis points, the highest increase since 1994. The Fed’s decision was followed by similar interventions by the Bank of England and the National Bank of Switzerland.
This has affected cryptocurrencies. The total capitalization of all cryptocurrencies has fallen by more than $ 350 billion in the last two weeks. Bitcoin has lost more than half of its value since the beginning of the year.
The cryptocurrency market was already volatile before the Fed raised interest rates last week, with investors upset by the $ 60 billion collapse of popular stablecoin terraUSD and its “brother” luna.
Source: Capital
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