Absolute Strategy Research co-founder Ian Harnett suggested that this year the price of bitcoin will fall to $13,000, as it is typical for it to fall by 80% from its historical highs.
The cryptocurrency market is currently experiencing “bearish pressure”. It was partly triggered by a 75 basis point increase in interest rates by the US Federal Reserve (Fed), the largest increase since 1994. The Fed was followed by the Bank of England and the National Bank of Switzerland. This, in turn, causes liquidity problems for major industry players.
After analyzing past cryptocurrency rallies, Ian Harnett, head of investment at Absolute Strategy Research, concluded that Bitcoin tends to drop by about 80% after hitting record levels. For example, after peaking at $20,000 at the end of 2017, Bitcoin fell to almost $3,000 in 2018.
Last November, bitcoin reached $69,000, but this year it “turned around” in the opposite direction. Therefore, with a high degree of probability, the BTC rate may collapse to $13,000, and this will become its key support level, Harnett predicts.
“We will still sell cryptocurrencies in the current environment. This is truly a liquidity game. We believe that crypto assets cannot be called currencies and goods, and certainly not a store of value. If there is a lot of liquidity, Bitcoin does well. But when that liquidity is taken away, which is what central banks are doing now, the market is under a lot of pressure,” Harnett said during CNBC’s Squawk Box Europe.
To predict the price of bitcoin, many investors use the Stock-to-Flow (S2F) metric, developed by the cryptocurrency analyst PlanB. However, Ethereum co-founder Vitalik Buterin recently criticized it, calling this model incorrect, since the BTC rate strongly deviates from forecasts based on it.
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