coinquora.com
Absolute Strategy Research co-founder Ian Harnett believes that the downfall of Bitcoin might not be over just yet. He believes that the past crypto rallies bear witness to such a plunge, as Bitcoin tends to lose 80% of its value in such situations.
He cited the example of the year 2018 when Bitcoin hit $3,000 after touching $20,000 in 2017. Ian added that if such an event reoccurs, we will witness bitcoin lose 40% and could hit $13,000.
We would still be selling these kinds of cryptocurrencies into this environment. It really is a liquidity play. What we’ve found is it’s neither a currency, nor a commodity and certainly not a store of value.
Bitcoin hit an all-time high of $69,000 during the bull market of 2021. Ian states that if such an event is likely to occur, bitcoin could hit $13,000, which is a key support area.
In a world where liquidity is plentiful, the Bitcoins of this world do well. When that liquidity is taken away — and that’s what the central banks are doing at the moment — then you see those markets come under extreme pressure.
The present bear market witnessed high inflation combined with the Fed increasing the interest rates. The major impact began last month with the fall of the Terra ecosystem. All of these factors took a significant toll on the stock and crypto markets.
These events were also followed by the Celsius issue, where it halted withdrawals, swaps, and trading for over eight days. Three Arrows Capital has also displayed financial instability as it suffered a major loss on its LUNA investment.
The market is slightly recovering from Bitcoin’s fall below $18,000 last week. But, if Bitcoin hits $13,000, the market should be ready for another bloodbath.