Bitcoin could plunge even further to a low of $13,000, one strategist warns

If crypto’s previous bubbles are something to go by, bitcoin could be about to fall a lot further.

That’s in accordance to one strategist, who warns the world’s high cryptocurrency is probably going to tank as low as $13,000 — an virtually 40% drop from present ranges.

“We would nonetheless be promoting these sorts of cryptocurrencies into this atmosphere,” Ian Harnett, co-founder and chief funding officer of Absolute Strategy Research, instructed CNBC’s “Squawk Box Europe” Tuesday.

“It actually is a liquidity play. What we have discovered is it is neither a foreign money, nor a commodity and definitely not a retailer of worth.”

Explaining his bearish name, Harnett stated previous crypto rallies present bitcoin tends to fall roughly 80% from all-time highs. In 2018, as an example, the cryptocurrency plummeted shut to $3,000 after hitting a peak of almost $20,000 in late 2017.

Such a drop in 2022 “would take you again to about $13,000,” a “key assist space” for the token, in accordance to Harnett. Bitcoin rose to a record high of almost $69,000 on the peak of the 2021 crypto frenzy.

“In a world the place liquidity is plentiful, the bitcoins of this world do properly,” Harnett stated. “When that liquidity is taken away — and that is what the central banks are doing in the mean time — then you definitely see these markets come beneath excessive strain.”

The crypto world is on edge as traders grapple with the impression of greater rates of interest on belongings that flourished in an period of ultra-loose financial coverage.

Last week, the Federal Reserve raised its benchmark lending price by 75 foundation factors, its largest single hike since 1994. The resolution from the Fed was adopted up with related strikes from the Bank of England and the Swiss National Bank.

That’s taken its toll on digital belongings. The mixed worth of all cryptocurrencies plunged greater than $350 billion up to now two weeks. Bitcoin was buying and selling at a worth of $21,393 Tuesday, up 6% within the final 24 hours however nonetheless down greater than 50% year-to-date.

The crypto market was already on shaky floor earlier than the Fed’s price hike final week, with merchants roiled by the $60 billion collapse of well-liked stablecoin terraUSD and its sister token luna.

To further complicate issues, the autumn within the worth of a derivative token designed to be one-to-one redeemable for ether has exacerbated financial troubles at main business gamers like Celsius and Three Arrows Capital.