Bitcoin (BTC) price could fall to ,000, strategist warns

Bitcoin (BTC) price could fall to $13,000, strategist warns

Bitcoin (BTC) price could fall to ,000, strategist warns

If crypto’s past bubbles are anything to go by, bitcoin would be about to fall much further.

That’s according to one strategist, who warns that the world’s top cryptocurrency will likely tank as low as $13,000 — a nearly 40% drop from current levels.

“We would still be selling these kinds 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 really is a liquidity game. What we found is that it is not a currency, nor a commodity, and certainly not a store of value.”

Harnett stated his bearish call, saying past crypto rallies show bitcoin tends to fall about 80% from all-time highs. In 2018, for example, the cryptocurrency plunged nearly $3,000 after peaking at nearly $20,000 in late 2017.

Bitcoin rose to an all-time high of nearly $69,000 at the height of the 2021 crypto frenzy. By 2022, it has moved in the opposite direction.

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Such a drop in 2022 “would set you back to about $13,000,” a “key support area” for the token, according to Harnett. Bitcoin soared to an all-time high of nearly $69,000 at the height of the 2021 crypto frenzy.

“In a world where liquidity is abundant, this world’s bitcoins are doing well,” Harnett said. “If that liquidity is taken away – and that’s what the central banks are doing right now – then you see those markets come under extreme pressure.”

The crypto world is on edge as investors grapple with the impact of higher interest rates on assets that have thrived in an era of ultra-easy monetary policy.

Last week, the Federal Reserve raised its benchmark lending rate by 75 basis points, the largest increase since 1994. The Fed’s decision was followed by similar moves by the Bank of England and the Swiss National Bank.

That has taken its toll on digital assets. The combined value of all cryptocurrencies has fallen by more than $350 billion in the past two weeks. Bitcoin traded at a price of $21,393 on Tuesday, up 6% in the past 24 hours but still down more than 50% so far.

The crypto market was already on shaky ground before the Fed’s rate hike last week, with traders confused by the $60 billion collapse of the popular stablecoin terraUSD and its sister token luna.

To complicate matters, the depreciation of a derivative designed to be exchangeable one-to-one for ether has exacerbated the financial problems of major industry players such as Celsius and Three Arrows Capital.