A partner from a top crypto investment firm is warning that more pain may be in store for Bitcoin and the crypto markets before investors can start thinking about new rallies.
In a tweetstorm, the pseudonymous SpartanBlack from Spartan Group weighs in on the state of the crypto markets.
According to the crypto investment firm executive, with Bitcoin down over 40% from its all-time highs, it’s safe to say that BTC and the crypto markets are in a bear market. Though the bulk of the correction is likely over, SpartanBlack says another leg down may be on the horizon.
“Using BTC as a proxy,
50% down vs ATH = $32,440 (-3% from here)
60% down vs ATH = $25,952 (-22% from here)
70% down vs ATH = $19,464 (-42% from here).”Â
He says the worst thing that could happen from this point onward is likely a 40% drop from current prices.
“So in terms of quantifying the downside risk from here, my base case would be a further 20-30% down from here, with 40% being a worst-case scenario.”
While SpartanBlack sees more downside potential for Bitcoin, he notes that there’s a possibility the recent sell-off could just be a correction within a greater bull cycle, which means investors won’t have to wait as long for big returns.
“In terms of upside, I think a 3-5x return over a 3-4 year timeframe is conservative judging from: 1) returns generated in the latest cycle (20x for BTC); 2) more institutional capital flowing into crypto; 3) implied total market cap of $4.5-$7.5 trillion (smaller than market cap of gold).
Finally, if somehow this recent correction is but a short-term detour within a continuing bull market, then we will likely see the 3-5x return realized in 6-9 months instead of 3-4 years.”Â
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