It’s been a bad start of the year for Bitcoin (BTC-USD), and 2022 could bring in a bit more pain.
While some bulls continue to forecast $100,000, one strategist doesn’t see that happening this year – or next.
“Long term, I love cryptocurrency, I love Bitcoin. But the charts — and I’m a technician — are just not showing that,” Gareth Soloway, president and CFO of InTheMoneyStocks.com told Yahoo Finance Live.
“Bitcoin for me, has a nasty head-and-shoulders pattern on it. Believe or not, in early 2022, or early 2023, you could see a move down sub-$20,000 in Bitcoin,” he added.
“We’ve seen Bitcoin hovering between $52,000 and $46,000 for the last month. And it keeps hitting on that $46,000 level. So on a technical basis, if you break below that $46,000…you are going to see downside to about $42,000, the low from early November.”
The digital coin broke a key support level on Wednesday following the latest FOMC minutes which highlighted a more hawkish discussion among Fed officials than what markets had anticipated.
Soloway highlights another pattern. While the Dow and S&P 500 (^GSPC) saw a Santa Claus rally coming into the new year, Bitcoin has continued to falter in the last month. It’s now more than 35% off its all time high levels from November.
“There’s some little disconnect with cryptocurrency as a riskier asset, and I do worry that, it, including Ethereum (ETH-USD) will start to see further downside,” said Soloway.
The technician predicts Gold (GC=F) will outperform the S&P 500 and Bitcoin for this year. However long term, he still believes Bitcoin will be the place to be.
“You look 5 years out, Bitcoin is easily at $100,000, maybe even $250,000. But for me, I’m looking at the leverage in the system including the stock market,” said Soloway.
The Federal Reserve’s plan to reduce its balance sheet and likely raise interest rates this year “is going to take a lot of money and liquidity out of the system.”
“Bitcoin and cryptocurrency are going to see their dot-com moment over the next year or two,” he added.
Ines is a markets reporter covering stocks from the floor of the New York Stock Exchange. Follow her on Twitter at @ines_ferre
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