Why Bitcoin Is Likely to Fall to $15,000

With Bitcoin (CCC:BTC-USD) making some worrying intraday lows following its mercurial rise, more people have come out of the woodwork to warn about the cryptocurrency. One prominent voice to express concern is Scott Minerd, Guggenheim’s chief investment officer. In an interview with CNBC, he said that BTC could fall as low as $15,000.

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Obviously, it’s not the news that Bitcoin bulls wanted to hear. However, it appears that Minerd was being gracious with his warning. “The real bottom, when you look at the technicals, $10,000 would be the real bottom, you know, that’s probably a little extreme, so I would say $15,000,” he said during the interview.

According to Minerd’s assessment, $15,000 is roughly 25% lower than what other analysts believe the Bitcoin low will be. Well, it’s a good thing InvestorPlace gave you that heads up a month before Minerd did — and you didn’t even have to pay for a premium subscription! On May 25, I made this note: “I see the bottom of Bitcoin at around $15,000.”

Recently, my Benzinga colleague Chris Katje wrote about a sports-betting scenario regarding baseball phenom Shohei Ohtani. I know nothing about sports betting and I know next to nothing about baseball. But the one thing I do know is that hitting home runs requires multi-dimensional catalysts. At its core, you need a combination of velocity and launch angle.

Hit the ball with too high of an angle and you get a flyout. Hit the ball with high velocity but a shallow angle and you won’t go the full distance. Instead, you need a balance between the two to go yard.

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Bitcoin Must Do the Path Before Proceeding Forward

Now, you might be wondering, what the heck does baseball have to do with Bitcoin? When it comes to the art of homering, quite a lot actually.

Below, I’ve taken the liberty of creating a scatter plot analysis of BTC, comparing its price point against its month-over-month performance (or the magnitude of the trading action). By eliminating time as a consideration, you can make mathematical insights that lay Bitcoin investors don’t recognize.

First, BTC will almost surely correct because the enthusiasm over the cryptocurrency is too heavily levered to the upside. From $15,000 onward (keep in mind that the x-axis is logarithmic), you can see that the average month-to-month performance for positive trades is a whopping 34.2%. On the flipside, the month-to-month performance for negative sessions averages a loss of 17.5%.

In this narrowly defined range, you can basically be a dart-throwing monkey and make money. But such narrow ranges don’t last forever, which is why you should never just judge an analyst based on how much they make during bull markets, but how little they lose in bear markets. Think about that when you have a chance.

Second, note that few trading sessions occurred in the $15,000 and $30,000 range. Of course, this is because Bitcoin blitzed its way toward its all-time highs in rapid fashion. But such drastic rises leaves a big technical gap, which is part of the reason why you’re seeing sharp volatility right now.

Third, the magnitude range of BTC’s trading action historically pings between 20% to the upside and 20% to the downside. Please see that this magnitude range is conspicuously absent between the 15k to 30k price points.

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What does this mean? Bitcoin needs to settle into a sustainable magnitude range while building technical support at lower price levels it skipped on its way to $60,000-plus. Only then will BTC have the combo of magnitude and support to really knock it out of the park.

Keep the Powder Keg Ready

Nevertheless, collective investor sentiment is a funny thing, especially in the era of meme trades. Anything can happen, which is why I wouldn’t be opposed to buying some BTC at its time of writing price (a range of approximately $34,000 to $36,000 in the last 24 hours, as of June 29).

But if it were me, I’d keep the powder keg dry as much as possible. Ultimately, any investment market has an ebb and flow. Since we’ve already enjoyed a massive upswing in valuation over an extremely short period of time, the crypto sector needs a rest. Therefore, I do see the possibility of $15,000 Bitcoin in the not-too-distant future.

On the date of publication, Josh Enomoto held a LONG position in BTC. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

A former senior business analyst for Sony Electronics, Josh Enomoto has helped broker major contracts with Fortune Global 500 companies. Over the past several years, he has delivered unique, critical insights for the investment markets, as well as various other industries including legal, construction management, and healthcare.

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