It’s been a horror few weeks for cryptocurrency – and now the two biggest blockchains are set to shed as much as 70 per cent of their current value.
It’s been a horror few weeks for cryptocurrency enthusiasts but the worst is yet to come, according to market analysts.
One blockchain expert has warned that the world’s top-ranked cryptocurrency, bitcoin, is set to drop down to just $US8000 ($A11,000) in value.
At time of writing, bitcoin was trading at $US29,500 ($A41,500).
As dire as that price is, that’s actually a 1.5 per cent improvement from the day before, indicating just how much strife the crypto market is in.
Cryptocurrency has been stuck in a rut for most of 2022, but it plunged to new lows for the year last week, after a stable coin plummeted by 98 per cent in the space of just 24 hours – something which should have been impossible.
The cryptocurrency community was left reeling when terra (UST), previously among the top 10 most valuable cryptocurrencies in the world, slumped below $US1 ($A1.42) earlier this month.
The impact has been instant.
Skittish investors have pulled out and it’s left the entire cryptocurrency space in distress, with bitcoin and ethereum briefly reaching levels that hadn’t been seen since June last year.
Now Guggenheim Investments chief investment officer Scott Minerd warned yesterday bitcoin could continue its descent to the bottom and could fall as low as $US8000 ($A11,000).
Were that to happen, it would mean the blockchain would shed around 70 per cent of its current value.
“When you break below 30,000 [dollars] consistently, 8000 [dollars] is the ultimate bottom, so I think we have a lot more room to the downside,” Mr Minerd told CNBC.
However, in some good news, the CIO also said that while most crypto is “junk”, bitcoin and ethereum will survive.
However, he doesn’t think bitcoin and ethereum will end up as the biggest players and used an analogy of the dotcom boom in the 2000s.
“I don’t think we’ve seen the dominant player in crypto yet,” he said.
“If we were sitting here in the internet bubble, we would be talking about how Yahoo and America Online were the great winners.
“Everything else, we couldn’t tell you if Amazon … was going to be the winner.”
“I don’t think we have had the right prototype yet for crypto.”
Mr Minerd’s warning comes within days of a similar prediction for ethereum, a blockchain with the second largest market capitalisation, also facing similar issues.
Ethereum is expected to lose 80 per cent of its value in the near future, according to a technical analyst.
The ether token has already lost 60 per cent of its value since it reached an all-time high in November last year.
At time of writing, ethereum was trading at $US1984 ($A2800).
However, John Roque from 22V Research said he expected that number to drop as low as $US420 ($A600) if the coin can’t rally, according to Bloomberg.
Mr Roque was not hopeful, saying in a note earlier this week that ethereum is “oversold daily and oversold weekly and cannot rally”.
Over the weekend, ethereum’s 28-year-old co-founder Vitalik Buterin revealed he’s lost billions in the bear run.
The entrepreneur of the second most valuable cryptocurrency tweeted sombrely to his four million followers: “Btw I’m not a billionaire anymore.”