Billionaire investor Jeffrey Gundlach has said the bitcoin chart currently looks “pretty scary” and that the cryptocurrency could well fall to $23,000-roughly where it stood in the middle of December 2020.
Gundlach, commonly known as the Bond King, told CNBC on Thursday that a drop to around $23,000 could be a good time for investors who are want to increase their involvement with bitcoin to buy the dip. But he said the asset is not for him, as he doesn’t have that kind of risk tolerance in his DNA.
Bitcoin has fallen more than 50% since touching a record high above $64,000 in April. It traded at around $31,300 on Friday, having stood above $34,000 on Monday.
Gundlach, who is CEO of investment firm DoubleLine, told CNBC’s “Halftime Report” that he thought the chart looked like a “massive head-and-shoulders top.”
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A head-and-shoulders formation is when an asset makes the shape of three peaks on a graph, with the middle peak the biggest. Chart-watchers see it as a negative signal that investors have switched from being “bullish” to “bearish. “
“I’m not a big believer in head-and-shoulders tops, but this one looks pretty convincing,” Gundlach said.
“I’ve got a feeling you’re going to be able to buy it below $23,000 again,” he said. He later added: “I would not own bitcoin presently, I think you’ll have an opportunity to buy it at a cheaper level.”
Bitcoin’s fall has been driven by a crackdown on crypto “mining” and payments in China, as well as Tesla CEO Elon Musk turning against the token due to its massive energy use.
Gundlach said bitcoin is far too volatile for him. “I’ve never been long bitcoin personally, I’ve never been short bitcoin, it’s just not for me. I don’t have that kind of risk tolerance in my DNA where I have to get worried to pull up the quote every day to see if it’s down 20%.”