Bitcoin’s price fell below $30,000 on Tuesday, which was negative for the year, until it recovered. We asked five experts to measure what the actual money with crypto is doing from here.
Rich Ross, Evercore ISI’s head of technical analysis
According to Rich Ross of Evercore ISI, Bitcoin is a good story with a bad chart, but both can change quickly.
“An ominous complex head-and-shoulders top looms large as we face critical support at $30,000,” he explained. “A ‘close’ below $30,000 would target $19,000, with a potential downside of $12,000 to approximate the previous two notable declines in recent years.”
“That said, with the world watching, well defined support at ‘big round numbers’ is always difficult to break,” he added, “and should the head and shoulders top ‘fail’ to break down and support to hold, it could provide the catalyst for a rapid reversal of fortune as traders get caught leaning at precisely the wrong moment.”
Ross described himself as one of the most bullish strategists on risk assets in general, with an S&P 500 target of 4,500 by Labor Day and a 5,000 forecast by year’s end.
“This historically rising tide of liquidity will continue to float most boats, including bitcoin when it reaches its level,” Ross predicted.
Fundstrat Global Advisors’ Tom Lee
Bitcoin’s technical picture may be bleak right now, but long-time bitcoin bull Tom Lee remains optimistic, he said on Tuesday.
“We have to remember that bitcoin makes the majority of its gains in a single year in 10 days, so the fact that it’s below $30,000 now doesn’t rule out the possibility of this generating some really big gains before year’s end and potentially touching $100,000 or higher,” the strategist said.
He also mentioned that with every bull market, new entrants enter the crypto space to ride the price wave, and major pullbacks, such as this week’s, separate the speculators from the investors.
“Their reaction to the headlines really speaks to the idea that you are trying to transfer bitcoin right now from meme hands or people buying it for the price into the hands of people who appreciate, really, the technology and the idea of sound money,” he said.
“It would be difficult for people to find another general, multi-decade story that does not involve digital assets. So, while 2021 appears to be a bad year for crypto investors, in the context of a decade, this is just noise, and it’s a great time to buy,” Lee added.
Bitwise Asset Management’s chief investment officer, Matt Hougan
According to Matt Hougan, CIO of crypto asset manager Bitwise, the news in crypto right now is short-term negative but long-term positive.
“China prohibiting crypto mining makes for bad headlines, but it is a long-term positive for the bitcoin network,” he explained. “The formation of a ‘interagency sprint team’ by US regulators to create a new regulatory framework for crypto sounds terrifying, but it is necessary if crypto is to become mainstream. Elon Musk believes that raising concerns about cryptocurrency’s carbon footprint will eventually lead to a stronger market, as environmentally friendly bitcoin will accelerate institutional adoption.
“We’re seeing a lot of short-term pressure on prices,” Hougan added, “but Bitwise investors in aggregate are long-term investors who understand that volatility is part of the investment.” They notice the gleaming silver linings hidden beneath these clouds.”
BKCM stands for Brian Kelly.
According to Brian Kelly, founder and CEO of digital currency investment firm BKCM, this week’s price action is a “short-term threat.” He also stated that the Chinese government’s actions will ultimately strengthen bitcoin as an asset.
“China has banned bitcoin several times over the last nine years,” he said, beginning in 2013. “This is just a minor hiccup… What you’re really seeing is miners leaving China and dispersing around the world. Previously, there was a significant concentration of miners and people in China,” which raised concerns among many people about the centralization of what is supposed to be a decentralized cryptocurrency.
Furthermore, “many of the miners in China were not using very green mining techniques, so as this mining migrates across the world, we will see a much more decentralized mining network,” Kelly said.
The volatility is “business as usual,” he says, but the Chinese crypto crackdown is only partly to blame.
“As bitcoin has become a macro asset… some people have sold out of bitcoin because they thought the Fed tapering would harm it,” he explained. However, “nothing has changed at all in the bitcoin bull case.”
Pervalle Global’s Teddy Vallee
Teddy Vallee, founder and CIO of global macro hedge fund Pervalle Global, said, “We’re doing fine; the sentiment is just extremely low right now.”
He agreed that the mining shift away from China is “extremely positive,” as it reduces the risk of China seizing control of the network and opens the door to more environmentally friendly mining practices. In the short term, however, it is discouraging.
“That’s a lot of selling pressure at a time when crypto in general has had a rough go,” he said. “Bitcoin open interest, for example, is down to 57 percent from its high. The only other time we found such a large drop in open interest was at the end of March.”
“The number you see in terms of trading volumes – with every new technology or paradigm, people get overly excited about it, just like in the tech boom, but everyone who had that view in the tech boom was correct. The growth of cryptocurrency has been phenomenal, and it has been accelerated by what the Fed has been doing, from injecting stimulus during the pandemic to raising inflation expectations. “We’ve probably seen five years of bitcoin’s progress accelerate as a result of Covid.”