As long as we continue to see a lot of negativity out there, I just don’t see how suddenly Bitcoin is going to be the asset everybody wants. We’re still trying to figure out what it’s used for.
The Bitcoin market tried to rally on Friday but gave back gains rather quickly. Because of this, it looks as if it is ready to give up the $20,000 region as support, and I think that we will more than likely see a huge fight on our hands. If we get a daily close below the $20,000 level, it opens up Bitcoin to fresh selling. There is nothing on this chart that tells me that cannot happen, and I expected this to happen over the weekend.
Bitcoin is going to continue to be very noisy and in the crosshairs of a lot of short-sellers, because crypto itself is in a lot of trouble. So much fraud has been discovered recently that crypto has very little confidence. When you are trying to get larger investors involved, the one thing that you will need is confidence. That is lacking, and I don’t see it coming back anytime soon. Because of this, I fully anticipate that Bitcoin will not only break the $20,000 level but go much lower.
My current price target is somewhere around the $12,000 level. Yes, I recognize that could be a bit of a shocking number, but just five months ago somebody told you Bitcoin was going to challenge $20,000, you would not have believed them. We are about to enter another “crypto winter”, which means that nothing in crypto is going to work anytime soon. This is probably the best thing that could happen to the industry, because you cannot have so many fraud-related incidents and keep up confidence. In other words, you need to flush out a lot of the bad issues. As long as we continue to see a lot of negativity out there, I just don’t see how suddenly Bitcoin is going to be the asset everybody wants. We’re still trying to figure out what it’s used for.
Over the last several years, it has been a store of value, which is preposterous considering it can lose 80% of its value. It had also been thought of as a hedge against central bank printing, but the central banks have changed and this has wiped out Bitcoin. It was also thought of as an inflation hedge, which is clearly not the case. At this point, it’s just a speculative asset and should be treated as such.