After last week's thrashing, cryptocurrency investors probably don't want to hear any more discouraging words.
Unfortunately, one stock analyst believes that bitcoin could hit fall even lower than it has recently.
'A Lot More Room to the Downside'
"When you break below 30,000 [dollars] consistently, 8,000 [dollars] is the ultimate bottom, so I think we have a lot more room to the downside, especially with the Fed being restrictive,” said Guggenheim Chief Investment Officer Scott Minerd.
Minerd made his remarks during an interview with CNBC’s Andrew Ross Sorkin in a “Squawk Box” at the World Economic Forum in Davos, Switzerland on Monday, May 23.
Minerd said bitcoin could drop further and fall to $8,000 from its current levels, more than 70% down from its recent price of $29,253.
Bitcoin has fallen about 58% since its Nov. 10 high of $69,044.77.
“Most of these currencies, they’re not currencies, they’re junk,” he said, adding that even so, “I don’t think we’ve seen the dominant player in crypto yet.”
Minerd also compared the current situation to the dotcom bubble of the early 2000s.
“If we were sitting here in the internet bubble, we would be talking about how Yahoo and America Online were the great winners,” he said. “Everything else, we couldn’t tell you if Amazon or Pets.com was going to be the winner.”
“I don’t think we have had the right prototype yet for crypto,” he said, saying that currency needs to store value, be a medium of exchange and unit of account.
'Hesitant to Buy the Dip'
Cryptocurrencies suffered a serious blow when stablecoin UST or TerraUSD and its token sister Luna cratered.
Edward Moya, senior market analyst for the Americas with Oanda, said bitcoin prices remain weak despite a broad risk rally on Wall Street.
"It looks like most crypto traders are hesitant to buy the dip, which most likely means that the bottom has not been made," he said.
Moya noted that European Central Bank President Christine said that cryptocurrencies are “worth nothing”.
"It is unlikely that any head of a central bank will endorse bitcoin or the other top coins, especially as we are years away from a digital euro or dollar," Moya said. "It looks like bitcoin won’t really attract massive inflows until investors believe most of the major central banks are nearing the end of their tightening cycles."
He added that bitcoin will rally when Wall Street believes the Federal Reserve will stop hiking rates once they are near 3.00% and after the ECB will finally gets rates out of negative territory.
"Bitcoin will remain a choppy trade possibly throughout the summer, but should get its mojo back after the worst of global monetary tightening has been priced in," he said.