The price of bitcoin fell below $30,000 for the first time in four weeks, losing 5 percent of its value in a week and breaking below a trading range that could set up a steeper price plunge.
For bitcoin bears like New York University economics Professor Nouriel Roubini, it was an “I-told-you-so” moment.
“Bitcoin price is now below 30K. A critical level – meaning the majority of retail suckers, who entered into the market after March 2021, are in the red. Fundamentally it should go much lower” Roubini tweeted.
The CEO of New York macroeconomic consultancy Roubini Macro Associates, Roubini warned in 2006 of the credit and housing market bubble. Now he’s focused on crypto and blockchain. He predicted that bitcoin would never be used as a means of payment for goods and services. “This reliance on different tokens is effectively a return to barter,” he wrote in the Feb. 10 Financial Times column. “The Flintstones had a more sophisticated monetary system based on a benchmark: the cartoon cavemen used shells.”
When the price of bitcoin crashed by about 50 percent in May after reaching an all-time high in April, researchers at Vanda said, “(The) crypto bubble has started to unravel and data from different exchanges suggest that retail investors are capitulating.”
A Twitter follower reminded Roubini that he’s been saying for years that bitcoin is a “gigantic speculative bubble.” For example, Roubini said so in November 2017 when bitcoin was trading at $7,143.47. The price of bitcoin has gone up nine times in value since then, reaching an all-time high of close to $64,000 in April 2021. “Right on cue. Keep trying,” @PlebChumpIV tweeted.
Bitcoin’s current price movement resembles a descending triangle suggesting “bearish patterns that indicate distribution” or selling of an asset, Forbes reported. “The descending triangle is a bearish formation that usually forms during a downtrend as a continuation pattern,” according to StockCharts.com.
“Descending triangles are a very popular chart pattern among traders because it clearly shows that the demand for an asset, derivative or commodity is weakening,” Investopedia reported. “When the price breaks below the lower support, it is a clear indication that downside momentum is likely to continue or become even stronger.”
MicroStrategy CEO Michael Saylor began stockpiling bitcoin in August 2020 as a hedge against a devaluing dollar when stock in his Virginia-based enterprise software company was barely trading at $135. The MSTR price took off, hitting a peak of $1,272.94 per share on Feb. 9, before plummeting. MSTR was trading at $495.16 as of this writing. Saylor is the biggest bitcoin whale, having purchased 90,859 bitcoins at about $24,063 each for a total of $2.186 billion, according to Securities and Exchange Commission filings.
“Michael Saylor needs to get ready. These pumpers out here loved the low regulation- market manipulation in crypto on the way up, but they will hate it on the way down” The Moguldom Nation founder Jamarlin Martin tweeted.
Roubini has critics and detractors on Twitter. Some argue against the utility of bitcoin. “Fundamentally,” bitcoin “is growing” @Blockchaincrat tweeted. “Adoption is increasing. And this is the true value of BTC … Just early.”
“Price action is not a proper counter argument,” @Nick_Chanas tweeted. “Bitcoin could go to 1m$ on a spec run, but it still doesn’t mean it’s worth it’s value. Real value is derived from utility, Bitcoin has none.”
Charlie Bilello, founder and CEO of Compound Capital Advisors, pointed out in a tweet that while bitcoin has crashed 54 percent from its all-time high, other cryptocurrencies have crashed harder such as ethereum, down 59 percent and dogecoin, down 77 percent.
This year’s bitcoin correction from its all-time high is the second-longest in the bull market history, analytics service Ecoinometrics said in a recent tweet, predicting that the bitcoin price may stay in the $30,000 for a while.
Listen to GHOGH with Jamarlin Martin | Episode 74: Jamarlin Martin Jamarlin returns for a new season of the GHOGH podcast to discuss Bitcoin, bubbles, and Biden. He talks about the risk factors for Bitcoin as an investment asset including origin risk, speculative market structure, regulatory, and environment. Are broader financial markets in a massive speculative bubble?
Image credit: Stanislav Palamar / istock
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