Bitcoin soared in 2021 from around $33,000 at the start of the year to $69,000 in November, before falling to end the year at roughly $46,000. Since then, the world’s first and largest cryptocurrency has plunged further to trade at around $42,319 as of Monday, according to prices on the Bitstamp exchange.
Jackson said bitcoin could be seen as a financial mania, meaning big losses could soon follow. At this time, Bitcoin like other risk assets are suffering sharp declines. “A 45% loss is experienced in the 12 months after the peak of a typical financial mania,” he wrote.
If Bitcoin follows that pattern, its price will fall between $34,000 and $37,000 in October. But Jackson said a steeper drop is possible and the digital asset could drop below $30,000. But that scenario is far from certain, the Invesco strategist warned. “Last year, we talked about Bitcoin dipping below $10,000, but instead peaking at around $68,000,” he noted. However, there are growing signs that investors are concerned. for the prospects of bitcoin and cryptocurrencies.
Interest rate hikes from the Federal Reserve in 2022 could well dent the appeal of cryptocurrencies like bitcoin in the eyes of many investors, according to analysts at UBS, led by James Malcolm. They also said that Cryptocurrency investors are increasingly realizing that Bitcoin is not “better money”, because it is highly volatile and its limited supply makes it inflexible.
www.ambito.com