Bitcoin could fall to as low as $40,000, Zacks Investment Research Chief Equity Strategist John Blank says.
“A Bitcoin winter is 12 to 18 months long,” Blank told CNBC on Feb. 2. “These are well-understood technical features. So, at $76,000 from $125,000, which was the peak, we can get to $40,000.”
Blank said the $40,000 target was based on a megaphone chart pattern formed by the highs and lows of previous cycles.
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Blank said Bitcoin could reach the level “very quickly” or “over the next six to eight months,” depending on when large players such as Strategy (NASDAQ:MSTR) are forced to sell.
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Blank’s remarks come as Bitcoin has had a painful start to the year, leaving many investors, including Strategy, underwater. The asset fell as low as $60,000 on Feb. 6 before reversing sharply to most recently trade at $71,000. Still, it is down nearly 19% year-to-date.
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While Strategy CEO Phong Le has said the company has nothing to worry about unless Bitcoin crashes to $8,000 and stays there for five to six years, Blank cautioned against putting too much stock in public-facing statements.
“He’s going to talk one game and play another, right?” Blank said, referring to Strategy Chair Michael Saylor. “He’s a trader. I’ve noticed many, many traders, [I] work with a lot of them in the company I’m in, they’ll say one thing, but if the market turns against [them] three days later, they’re doing a different trade.”
Blank told CNBC the cryptocurrency market was lacking a catalyst, citing recent uncertainty over stablecoin legislation. He also said that people may be getting tired of the trade.
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“People are tired of this trade,” he said. “Tired of it because COVID is over, tired of it because there are other screen-based things to do.”
Blank described the cryptocurrency market as inelastic, saying the price “explodes” when there is a lot of hype and new sources of demand, and that without that, price pulls back quickly.
“They know they need another source of demand and they need a big one,” he told CNBC.
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This article Bitcoin Can Crash To $40K In The Next 6 To 8 Months, Strategist Warns originally appeared on Benzinga.com
