Strategist warns Bitcoin (BTC) price could drop as low as $13,000

If crypto’s past bubble is anything to go by, bitcoin may drop further.

That’s according to one strategist, who warns the world’s top cryptocurrency is likely to rally to as low as $13,000 – down nearly 40% from current levels.

“We will still be selling these cryptocurrencies into this environment,” Ian Harnett, co-founder and chief investment officer of Absolute Strategy Research, told CNBC’s “Squawk Box Europe” on Tuesday.

“It’s really a liquidity game. What we found is that it’s not a currency, it’s not a commodity, and it’s certainly not a store of value.”

Explaining his call for a price drop, Harnett said past crypto rallies have shown bitcoin trending down around 80% from its all-time high. In 2018, for example, the cryptocurrency plummeted to nearly $3,000 after peaking near $20,000 in late 2017.

Bitcoin surged to a record high of nearly $69,000 at the height of the crypto craze in 2021. In 2022, it moved in the opposite direction.

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Such a drop in 2022 “will put you back around $13,000,” a “critical support area” for the token, according to Harnett. Bitcoin has gone up one record high close to $69,000 at the height of the crypto craze in 2021.

“In a world where liquidity is abundant, this world’s bitcoin does well,” Harnett said. “When that liquidity is taken away – and that’s what central banks are doing right now – then you’re going to see those markets come under tremendous pressure.”

The crypto world is booming as investors grapple with the impact of higher interest rates on assets that thrive in an era of extremely loose monetary policy.

Last week, the Federal Reserve raised its benchmark lending rate by 75 basis points, the only increase since 1994. The decision from the Fed came after similar moves from the Bank of England and the Bank of England. Swiss Country.

That has taken a toll on digital assets. The aggregate value of all cryptocurrencies has dropped by more than $350 billion in the past two weeks. Bitcoin was trading at $21,393 on Tuesday, up 6% over the past 24 hours but still down more than 50% so far.

Crypto markets were rocked before the Fed raised rates last week, with traders $60 billion collapse of the popular stablecoin terraUSD and its sister token luna.

To complicate matters further, the decrease in the value of a Derivative token designed to be redeemable one-to-one for ether yes more serious financial trouble at major industry players such as Celsius and Three Arrows Capital.

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