Investing.com – As regulatory pressures come to the fore once again, warnings of a widening cryptocurrency meltdown, led by Bitcoin, are rising as fears of an economic recession grow.
Hours ago, China decided to ban the use of digital currencies or promote and advertise it with the largest Chinese communication program, WeChat, while the Canadian regulatory authorities in Ontario announced a fine for two digital currency exchanges.
Co-founder and chief investment officer at Absolute Strategy Research, Ian Harnett, sees an imminent crash of Bitcoin (BTC) looming strong.
Co-founder Harnett predicted that the most valuable cryptocurrency would likely drop to $13,000, roughly a 40% drop from current levels.
“We’ll still be selling these types of in this environment,” Harnett said. “It’s a liquidity issue. What we’ve found is that it’s not a currency, it’s not a commodity, and it’s definitely not a store of value.
The reason for pessimism
The chief investment officer of Absolute Strategy Research said that the reason behind his pessimistic view of the digital currency is that previous cycles of ups and downs show that Bitcoin tends to fall by about 80% from its all-time highs.
In 2018, for example, Harnett added, the digital currency fell to nearly $3,000 after hitting a record high in late 2017 of nearly $20,000.
If this scenario is repeated, it means that a drop in 2022 will bring Bitcoin back to around $13,000, which he considers a major support area for the digital currency, according to Harnett.
Bitcoin soared to a record high of nearly $69,000 at the height of the crypto craze late last year 2021
the edge of the abyss
The chief investment officer at Absolute Strategy Research said the cryptocurrency world is on the brink, as investors grapple with the impact of higher interest rates on assets that have made strong gains.
Harnett added that the struggle over assets that thrived in the era of loose monetary policy and excessive quantitative easing policies expose violent risks coinciding with the change of that policy.
Harnett said that in a world where there is plenty of liquidity, Bitcoin in this world is doing well, but when that liquidity is withdrawn under the tightening policy you see that those markets are under severe pressure.
Harnett added that currencies were shaken a lot after the Federal Reserve raised its benchmark lending rate by 75 basis points, its biggest rise since 1994.
These moves have affected digital assets, Harnett added, as the total value of all digital currencies has fallen by more than $350 billion in the past two weeks.
fining stock exchanges
The Ontario regulator said it had obtained orders to fine the Kyocion Exchange more than $1.6 million and ban the exchange from participating in the province’s capital markets.
In a separate decision, the Ontario Securities Commission announced that PayBit had paid approximately $2.4 million and paid the regulator $7,724 as part of its investigation costs.
Pursuant to the decisions, the two exchanges hid themselves in compliance with Ontario securities laws, but only PayBit responded to the enforcement actions of the Ontario Securities Commission, and maintained an open dialogue.
“Digital forex trading platforms that want to operate in Ontario must comply with the rules or face enforcement action,” said Jeff Kehoe, director of the implementation of the Ontario Securities Commission.
According to the regulator, PayBit will terminate its Ontario operations if the company is unable to register.
Currency market analyst Rickett Capital said earlier that Bitcoin’s historical trends indicate 80/85%% is the classic bear market pullback target, putting the BTC/USD pair between $11,000 and $14,000.
The chief investment officer at the Guggenheim Foundation says it could fall back to the $8,000 level, which means a drop of more than 70 percent from its current levels.
Earlier, Fairlead Strategies analyst Katie Stockton said that Bitcoin could drop an additional 40% if the important support level at $27.2 thousand is broken.
The analyst added that the cryptocurrency market suffered a sharp decline with the collapse of the stablecoin Terra, which caused the price of Bitcoin to drop at levels near $26,000 for a short period before recovering later.
Stockton said that if bitcoin fails to hold the $27.2 thousand support level, which means it will close below it for two consecutive weeks, it may drop to $18.3 thousand.
Earlier, Peter Schiff, chief global economist and strategist at Euro Pacific Capital, predicted an even bleaker scenario for the largest digital currency, Bitcoin, if the downturn continues.
The famous economist Peter Schiff said at the time: “Bitcoin is under pressure again, now that it has failed to hold important support levels near the $35,000, $30,000 and then the $20,000 levels.”
“If Bitcoin fails to maintain these support levels, Bitcoin will crash below $10,000,” said Peter Schiff.
The article does not express a recommendation or nomination, but merely a monitoring of market fluctuations, as trading in digital currencies involves high risks, including the risk of losing some or all of the investment amount, knowing that it is not completely subject to financial authorities and markets.