Bitcoin has already corrected more than 30 percent from its all-time high in November 2021. Invesco Global thinks that could be much more. The company expects the Bitcoin price to be headed for a major price crash.
“BTC could fall to $30,000 in 2022”
Bitcoin has once again become the center of the discussion. Indeed, the largest cryptocurrency continues to trade in the $41,000-$44,000 range. Paul Jackson, of Invesco Global, believes the Bitcoin bubble could burst soon. He also believes that BTC could lose half its value by 2022 if investor mania subsides.
Jackson’s comments stemmed from his list of ten “unlikely but possible outcomes for 2022”. The Invesco chief also said he sees the BTC price drop below $30,000 by 2022. This would be a price correction of more than 50 percent from all-time highs.
Referring to the 1929 stock market crash, Jackson said the rise in Bitcoin’s value has clear hallmarks of what has been called “financial mania.” He wrote :
“Bitcoin mass marketing reminds us of stockbrokers activity leading up to the 1929 crash. We know how that ended and Bitcoin has already fallen to around $42,000 dollars (as of January 7, 2022). Here we closely follow the downward path of our mania model. That template suggests a 45 percent loss is experienced in the 12 months after the peak of a typical financial mania.”
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What if Bitcoin follows the 1929 model?
If Bitcoin were to repeat this example of the 1929 stock market crash, Bitcoin could drop to $34,000 by the end of October 2022, Jackson said. Continuing to speculate, Jackson added:
The model also suggests that bubbles typically continue to deflate for another two years. So we think it’s not too hard to imagine Bitcoin dropping below $30,000 this year (with the caveat that we’ve done this wrong before and it looks like it’s going through a series of bubbles).
Bitcoin has exhibited similar behavior in the past. The BTC price peaked in December 2017 and by the following month of January 2018, it had entered a severe correction. As a result, it lost more than half of its value. Later, Bitcoin remained volatile for an extended period of two years, crashing below USD 4K before resuming mega rallies in 2020.
Jackson is not alone in expecting Bitcoin to correct further. Many other market analysts believe the same. In a recent JPMorganreport Nearly 20 analysts also believe that BTC will go below $30,000. However, a majority of them believe Bitcoin could climb to $60,000 by the end of the year.
But we are sure of some exciting action ahead. More countries could use Bitcoin as legal tender, with more regulatory clarity and thus more institutional participation.
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