Bitcoin “could plunge even lower,” as low as $13,000, one trader warned.





If past crypto bubbles are any indication, bitcoin could be on the verge of falling even further.

So says a strategist, who warns that the world’s top cryptocurrency could drop as low as $13,000, a drop of nearly 40% from current levels.

“We will always sell 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” show on Tuesday.

“It’s really a liquidity game. What we have found is that it is neither a currency nor a commodity and even less a store of value. »

Explaining his bearish call, Harnett said past crypto rallies have shown that bitcoin tends to drop around 80% from all-time highs. In 2018, for example, the cryptocurrency tumbled to nearly $3,000 after peaking near $20,000 in late 2017.

Bitcoin rallied to an all-time high of nearly $69,000 at the peak of the 2021 crypto frenzy. In 2022, it moved in the opposite direction.

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

“In a world of abundant liquidity, bitcoin in this world is doing well,” Harnett said. “When that liquidity is removed – and that’s what central banks are doing right now – then you see these markets are under extreme pressure. »

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

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

This has impacted digital assets. The combined value of all cryptocurrencies has plunged over $350 billion in the past two weeks. Bitcoin was trading at a price of $20,010 on Tuesday, down 5% in the past 24 hours. The number one cryptocurrency has lost more than half of its value since the start of the year.

The cryptocurrency market was already struggling ahead of the Fed’s rate hike last week, with traders reeling from the $60 billion crash of popular stablecoin terraUSD and its sister token luna.

To complicate matters further, the fall in value of a derivative token designed to be exchangeable for ether has exacerbated the difficulties of major players in the financial sector like Celsius and Three Arrows Capital.

Thomas Estimbre
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