By
Bhushan Akolkar
May 7th, 2024
The prediction is linked to the expected additional increase in interest rate in the US to control the inflation that is rising at a faster pace not seen in 40 years.
Bitcoin has been in a constant decline since late last year. A couple of weeks ago, it traded below $31,000 for the first time since July 2021. The digital asset has gradually been breaking key support points since then. The asset is currently trading at $29000, a 57% fall from its all-time high of $69,000. While there is huge competition in the market as buyers are struggling to overpower sellers, Guggenheim Chief Investment Officer Scott Minerd has predicted that Bitcoin is going to drop to as low as $8000.
The prediction alone has created fear as investors may be tempted to sell at this point to avoid a further loss. In an interview at the World Economic Forum in Davos, Switzerland, Minerd disclosed that the price has shown more signs of a continuous fall.
“When you break below 30,000 [dollars] consistently, 8,000 [dollars] is the ultimate bottom, so I think we have a lot more room to the downside, especially with the Fed being restrictive,” he said.
The prediction is linked to the expected additional increase in interest rate in the US to control the inflation that is rising at a faster pace not seen in 40 years.
The crypto market has seen around $500 billion value wiped off in the last month. This means a further fall in the Bitcoin price could be a huge blow. Bitcoin alone makes up over 40% of the total market value, and so, its pullback could affect the entire ecosystem.
He further revealed that most of the cryptocurrencies in the market are junk. However, Bitcoin and Ethereum would survive. He also stated that the dominant player in the crypto market has not been seen yet, comparing the current situation to that of dotcom in the 2000s.
“If we were sitting here in the internet bubble, we would be talking about how Yahoo and America Online were the great winners,” according to Minerd. “Everything else, we couldn’t tell you if Amazon or Pets.com was going to be the winner. I don’t think we have had the right prototype yet for crypto,” he added.
In the interview, he questioned the currency status of most cryptos, stating that a currency needs to be a unit of account, a medium of exchange, and a store of value. According to him, none of the cryptos qualify per these basic requirements. However, things could change in the future. He believes that technological advancements could open ways for the creation of an atmosphere where people would get used to using them for transactions.
Just recently, the European Central Bank President Christine Lagarde labeled cryptos as worthless and called for a regulation to control their use.