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Analyst who Predicted bitcoin's $40,000 level says 50% collapse could come next !!

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Analysts at Fundstrat Global Advisors Predicted price target to $40,000 on the thesis 2021 could be another banner year for the cryptocurrency. Less than 10 days after that prediction, bitcoin has already delivered on the call — rising nearly 40% to break through $40,000 with ease.

As for the rest of the year, however, investors should brace for volatility that could strike with just as much velocity to the downside before recovering in a potential quadrupling, according to Fundstrat Managing Partner Tom Lee.

“It’s a hypervolatile asset,” Lee said in an interview with Yahoo Finance Live. “Our roadmap for risk assets this year is that stocks would be pretty explosive out of the gate and peak sometime either in late January but as late as April around S&P 4,000 before a big drawdown happens. If the S&P falls 10%, bitcoin is going to have a huge drawdown it could be 40% to 50%.”

As Bitcoin Has already dropped by -17% as of writing this Post.

As drastic as that sounds, Lee points out it is pretty par for the course in terms of bitcoin’s historic moves, and the same pattern that hinted at bitcoin’s looming explosion to $40,000. In 2017, the cryptocurrency rallied more than 1,200% following the last time the bitcoin reward for miners was cut in half in a systematic process known as a “halving” in 2016. The latest halving occurred in May 2020.

“That’s a pretty typical correction for crypto,” Lee said. “In fact, I think last year it had a couple of drawdowns nearly that size.” Indeed, bitcoin fell more than 40% in just a matter of weeks in November 2019 and March 2020 when markets were collapsing at the beginning of the pandemic.

To be clear, even if the drawdown is as bad as Lee predicts, he believes the ensuing recovery could still carry bitcoin to a more than 300% increase for the year.

“If it looks like 2017, I think bitcoin will be up at least 300%,” he said. “I don’t think it’s straight up with a ruler, it’s going to be pretty jagged but at the end of the year, bitcoin is much higher.”

Analysts at JPMorgan earlier this week echoed the sentiment in a note explaining that bitcoin could reach as high as $146,000 if the cryptocurrency referred to as “digital gold” were to come to replace the same level of private wealth held in gold. That would mean bitcoin’s market cap would have to increase 4.6-times from where it began 2021 at $575 billion. Roughly 10 days into the year, its market cap now sits at $870 billion after reaching a New Mark of crossing $1 Trillion.

Posted Using LeoFinance Beta