Famous cryptocurrency analyst Timothy Peterson shared a detailed hypothetical bare market scenario for Bitcoin, suggesting a potential decline caused by macroeconomic factors.
In a recent post, Peterson analyzed conditions that could lead to a recession and made predictions on Bitcoin’s price trajectory.
Peterson argues there is no fundamental reason to prevent the bear market from happening now, and says the market needs a trigger. He says the main catalyst could be the US Federal Reserve decision not to cut interest rates this year. However, he points out that markets often latch negative events to justify the recession, even if that’s not the real reason.
Peterson’s analysis derives past NASDAQ declines, particularly comparisons with the 2022 Bear market. Peterson estimates that a monthly decline of about 2-3% could last 9-14 months if the market follows a similar pattern. However, given the price at the bottom of the market is rising over time, he suggests that he can reach the bottom in about seven months.
Based on this forecast, Peterson estimates that the Nasdaq can see a 17% drop, which will result in Bitcoin falling by around 33%, corresponding to price levels of $57,000.
However, he points out that psychological market behavior often prevents assets from reaching expected lows. He suggests that Bitcoin’s true lows are close to $71,000 instead of $57,000 for early opportunistic purchases, which has similarities to Bitcoin’s 2022 decline.
Despite presenting this bearish scenario, Peterson is not convinced that such a slump is imminent. He points out that the current market is not in a state of euphoric overvaluation, with significant capital continuing to be allocated to cash and fixed income assets. He also points out that investors’ sentiment is currently very bearish, and the spread of Bull Bears is at the lowest level since the COVID crash and the financial crisis of 2008, historically a strong buy signal rather than a sales signal.
*This is not investment advice.
