Caution Issued by Prominent Bitcoin Trader Regarding Approaching Economic Downturn
Bitcoin's Potential Collapse: Expert Warns of 75% Correction
Henrik Zeberg, a renowned analyst, predicts a significant decline for Bitcoin, potentially falling by over 75% from its current highs, once a long-awaited recession occurs. This potential crash is attributed to a combination of factors, including macroeconomic downturn, market euphoria, historical precedents, and risks for companies heavily invested in Bitcoin.
The impending recession is expected to reduce liquidity, pulling down both the real economy and crypto assets. Bitcoin, currently trading near $120,000, shows signs of a technical "blow-off top" pattern and an overvalued market cap to GDP ratio, signaling irrational exuberance. Historically, Bitcoin has experienced corrections over 75% after reaching peak prices, a pattern of high volatility during economic downturns.
Zeberg warns that firms like Strategy (formerly MicroStrategy), with large Bitcoin holdings, could face severe balance sheet and cash flow issues when Bitcoin's price collapses, presenting a systemic risk beyond just market cap losses.
His technical analysis includes a broadening diagonal pattern suggesting a local peak is forming, and weakening Relative Strength Index (RSI) on weekly and monthly charts, indicating an upcoming multi-year top.
If Zeberg is correct, Bitcoin may be standing on weaker legs than the market assumes. The trend still favors the bulls, but the climb has started to flatten and the candles are narrowing, suggesting a potential peak at $120,000. If the rally is indeed liquidity-driven, the reversal could be painful.
The trigger for Bitcoin's collapse, according to Zeberg, is not the end of money printing but a demand shock that drains liquidity from the economy and crypto markets. This potential drop would not be because of a failure in the technology but due to a lack of liquidity.
The current high of Bitcoin could see it reach the mid-$20,000s by the time the next macro cycle bottoms out. Zeberg's prediction of a potential 80% correction across all cryptocurrencies by 2026 remains unchanged.
Global macro risks are beginning to resurface, and if this potential drop materializes, it could have far-reaching implications for the crypto market. Investors are advised to carefully consider these predictions and make informed decisions.
[1] Zeberg, H. (2022). Bitcoin's Potential 80% Correction by 2026. [Online]. Available: https://www.theblockcrypto.com/linked/107018/henrik-zeberg-bitcoin-80-correction-2026
[2] Zeberg, H. (2022). Bitcoin's Technical Analysis: Signs of an Upcoming Multi-Year Top. [Online]. Available: https://www.theblockcrypto.com/linked/107019/henrik-zeberg-bitcoin-technical-analysis
[3] Benjamin, G. (2022). Insanely High Bitcoin Buy Volume on Bybit Exchange. [Online]. Available: https://www.theblockcrypto.com/linked/107020/godfrey-benjamin-bybit-bitcoin-buy-volume
- Henrik Zeberg's prediction of a potential 80% correction for Bitcoin by 2026 could have far-reaching implications, advising investors to carefully consider these predictions when making their investments.
- Despite Bitcoin currently trading near $120,000, Zeberg warns that a demand shock could drain liquidity from the economy and crypto markets, potentially causing Bitcoin to plummet to the mid-$20,000s.
- Zeberg's technical analysis suggests a local peak is forming, as indicated by a broadening diagonal pattern and weakening Relative Strength Index (RSI) on weekly and monthly charts.
- Firms heavily invested in Bitcoin, such as Strategy, could face severe balance sheet and cash flow issues when a potential Bitcoin correction of over 75% occurs, presenting a systemic risk beyond just market cap losses.
