Invesco’s global head of asset allocation compared bitcoin’s shock rally in 2021 to a financial frenzy, saying that BTC could hit a low of $30,000 by October.
An investment strategist at Invesco has said that if the crypto bubble bursts and follows the historical pattern seen in other crashes, the price of bitcoin could drop below $30,000 this year.
According to Paul Jackson, global head of asset allocation at the investment firm, this is likely to happen in the form of the “mania” that propelled bitcoin to a November high of $69,000.
In his forecast of a “probable but likely outcome for 2022”, Jackson said the BTC price could eventually see a 45% dump from its peak. And with the prolonged extension of the bubble crash, it is possible that the flagship cryptocurrency could be valued below $30,000 around October.
,The mass marketing of bitcoin reminds us of stockbroker activity before the crash of 1929,” said the Invesco strategist.
The 1929 reference pertains to the stock market crash, which hit Wall Street since Black Thursday on October 24. By the following week, Black Tuesday resulted in a sharp selloff of billions of dollars from the market.
,We know how it ended and bitcoin has already fallen to around $42,000 (as of 7 Jan 2022), following the path below our frenzy template,” she added.
Jackson said a 45% drop in the bubble crash template occurs in the 12 months following the asset’s peak, which he called “a typical financial frenzy,
In this case, he speculates, the price of bitcoin could drop to lows of $37,000-$34,000 by the end of October. He then believes that a possible trajectory could be tracking the historical bubble pattern, which could push BTC below the $30k level, provided that the specific bounce extends its explosion over the next two years.
,So, we don’t think it’s too much of a stretch to imagine bitcoin falling below $30,000 this year.R,” he said.
But Jackson was quick to note that the forecast could still be wrong, as was the case with the prediction of bitcoin’s dive below $10,000 last year. According to him, there is a “healthy chance” for the cryptocurrency to tag along last year’s upside cycle.
Bitcoin fell below $40,000 earlier last week, but quickly recovered to test resistance near $44,000. However the price of the cryptocurrency has tracked sentiment across the broader markets.
Analysts have pointed out that bitcoin is trading in lockstep with stocks, indicating that a fresh decline in the traditional asset could be repeated by crypto or vice versa. Since late last year, one of the broader pressures on equities has been a sign of a first quarter interest rate hike by the Fed, which is expected in early March.
As of writing, bitcoin is trading at around $41,685, down almost 3% over the past 24 hours.