The massive $1 trillion collapse of bitcoin and crypto over the past few weeks has investors spooked as fears of a “price spiral” surfaced.
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Bitcoin price has lost more than 50% since hitting its all-time high of nearly $70,000 per bitcoin in November, dragged down by a restrictive Federal Reserve and the collapse of two major cryptocurrencies. The price of other major coins — including Ethereum, BNB, XRP, Solana, Cardano, and Avalanche — has performed even worse.
Now Scott Minerd, the chief investment officer of $252 billion wealth manager Guggenheim, has revealed how far he thinks Bitcoin could fall before it hits an “ultimate bottom” – while warning that “the bulk of crypto is junk.” is”.
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“If you consistently go below $30,000, $8,000 is the ultimate bottom,” Minerd said CNBC On the sidelines of the World Economic Forum in Davos, adding Bitcoin is the “canary in the coal mine” when it comes to the broader crypto market.
“We see the crypto collapse as it is,” Minerd said. “Let’s face it – most of these currencies aren’t currencies, they’re junk. Most cryptocurrencies are garbage.”
Minor cryptocurrencies like Ethereum, BNB, XRP, Solana, Cardano and Avalanche were hit hard by the sudden collapse of stablecoin terraUSD and its support coin Luna this month, with panic sweeping the market as the contagion appeared to be spreading.
Minerd, who predicts that both Bitcoin and Ethereum – by far the two largest cryptocurrencies – will survive the current crypto crash, believes that one cryptocurrency will outperform many of the smaller coins currently jostling around space in the future.
“I don’t think we’ve seen the dominant player in crypto yet, I don’t think we’ve had the right prototype for crypto yet.”
Bitcoin price started falling along with stock markets late last year after blasting through the pandemic era, and rallied as the US Federal Reserve pumped cash into the economy to ease the economic damage from Covid-19 and fight lockdowns.
This week, the latest Fed FOMC meeting minutes revealed that the central bank will continue its policy of raising interest rates and trimming its bloated balance sheet, with most committee members signaling that hikes of 50 basis points would be “probably appropriate”. at the upcoming meetings in June and July.
“I think we have a lot more room downside, especially with the Fed being hawkish,” Minerd said. Others have also pointed out that the European Central Bank’s (ECB) telegraphed rate hike in July – the first in a decade – weighed on markets.
“Risk assets have not found relief over the past week as [Fed chair] Jerome Powell remains steadfast on the Fed’s approach of containing inflation by raising interest rates and trimming the balance sheet [ECB president] Christine Lagarde has signaled that the ECB will hike rates for the first time in over a decade from July and September 2022,” wrote Will Hamilton, head of trading and research at asset manager Trovio, in emailed comments.
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The bleak outlook for the bitcoin and crypto market reflects the somber mood that has taken hold over the past few months following the heady 2021 bull market that prompted some to make outrageously bullish bitcoin price predictions.
Last year, Minerd predicted that the price of bitcoin could go as high as $600,000 per bitcoin — a price that would take the total value of bitcoin to around $12 trillion.
“Cryptocurrency has entered the realm of respectability and will continue to grow in importance in the global economy,” Minerd said in February of last year.