After final week’s thrashing, cryptocurrency traders most likely do not wish to hear any extra discouraging phrases.
Unfortunately, one inventory analyst believes that bitcoin may hit fall even decrease than it has lately.
‘A Lot More Room to the Downside’
“When you break below 30,000 [dollars] consistently, 8,000 [dollars] is the ultimate bottom, so I think we have a lot more room to the downside, especially with the Fed being restrictive,” said Guggenheim Chief Investment Officer Scott Minerd.
Minerd made his remarks during an interview with CNBC’s Andrew Ross Sorkin in a “Squawk Box” at the World Economic Forum in Davos, Switzerland on Monday, May 23.
Minerd said bitcoin could drop further and fall to $8,000 from its current levels, more than 70% down from its recent price of $29,253.
Bitcoin has fallen about 58% since its Nov. 10 high of $69,044.77.
“Most of these currencies, they’re not currencies, they’re junk,” he said, adding that even so, “I don’t think we’ve seen the dominant player in crypto yet.”
Minerd additionally in contrast the present state of affairs to the dotcom bubble of the early 2000s.
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“If we were sitting here in the internet bubble, we would be talking about how Yahoo and America Online were the great winners,” he said. “Everything else, we couldn’t tell you if Amazon or Pets.com was going to be the winner.”
“I don’t think we have had the right prototype yet for crypto,” he said, saying that currency needs to store value, be a medium of exchange and unit of account.
‘Hesitant to Buy the Dip’
Cryptocurrencies suffered a serious blow when stablecoin UST or TerraUSD and its token sister Luna cratered.
Edward Moya, senior market analyst for the Americas with Oanda, said bitcoin prices remain weak despite a broad risk rally on Wall Street.
“It seems like most crypto merchants are hesitant to purchase the dip, which more than likely implies that the underside has not been made,” he said.
Moya noted that European Central Bank President Christine said that cryptocurrencies are “worth nothing”.
“It is unlikely that any head of a central financial institution will endorse bitcoin or the opposite high cash, particularly as we’re years away from a digital euro or greenback,” Moya said. “It seems like bitcoin received’t actually entice large inflows till traders imagine a lot of the main central banks are nearing the top of their tightening cycles.”
He added that bitcoin will rally when Wall Street believes the Federal Reserve will stop hiking rates once they are near 3.00% and after the ECB will finally gets rates out of negative territory.
“Bitcoin will stay a uneven commerce presumably all through the summer season, however ought to get its mojo again after the worst of worldwide financial tightening has been priced in,” he mentioned.