In the great game of predictions everyone tries to place their pawns to have a chance of being elected golden oracle at the end of the year. It doesn’t cost anything, and then if you’re ever right, you’re considered a new prophet until someone else makes an even more accurate forecast. All the more in the crypto !
Obviously it’s fair game, and this time it was the chief trader of the InTheMoneyStocks.com site who tried his hand at predictions in an interview with Heresy Financial broadcast on Wednesday. In particular, he compared the current evolution of the market crypto to the speculative bubble on Internet values 20 years ago.
- Back to the crash 2000s
- The Bitcoin soon to $4000!
- But where are we going on the cryptos?
Bubble of the 2000s: autopsy of a stock market crash
For those who were not “lucky” to be on the financial markets in 2000, we must briefly recall the trauma experienced by many investors.
While the Internet was on the verge of its nose in the early 1990s, it was really at the end of this decade that technology stocks began to break through and households were massively equipped with computers. At the end of the 20th century, the valuations of certain technological stocks thus became delusional. Investors give in to FOMO and always pay more for trendy titles.
At the beginning of 2000, the Bulls bursts and a big krach boursier on ‘tech’ values follows. The bloodbath is terrible for some: Microsoft loses 65% of its value and Amazon collapses by 95%.
Upon arrival, a large part of the companies go bankrupt and only the most resilient ones that bring real value manage to recover. The rest we know: Apple, Microsoft and other Amazons won the day, having remained the only ones standing.
Cryptos about to implode
Thus, according to Gareth Soloway, the market for cryptos is headed straight for the same scenario that tech stocks experienced in the early 2000s. Our expert trader believes the market needs to be purged to eliminate the cryptos useless:
“There are currently more than 15,000 cryptocurrencies and they are not necessary. There has to be a purge, just like the dot-coms in the late 90s, early 2000s.”
From there, the most serious players, like Amazon or Microsoft, will be able to flourish more serenely and conquer the world:
“It’s very Darwinian, and the fittest will survive”
This is not the first time that Gareth Soloway has predicted a crash on the cryptoshe who already announced a few months ago that Bitcoin would drop below the $20,000 mark. This time he goes further by announcing a crash much more important:
“If it happens to Bitcoin, I think it could hit a price target at $4000. »
However, he is not one of those who judge the cryptos useless like other of his colleagues, quite the contrary:
“I’m super optimistic. (…) I think it will go up to 500,000 dollars, a million dollars” he declared this Wednesday, speaking of the Bitcoin.
Towards a crypto supercycle?
Indeed the current market valuation seems very high. However, the value proposition behind it must also be taken into account.
The value of all the gold mined today is estimated to be between $10 trillion and $11 trillion. That of Bitcoin in comparison weighs “only” 800 billion. However, in the years to come its role is likely to be similar to that of gold: a store of value. It also has the advantage of being uncensorable, easy to transport and easily divisible unlike its counterpart.
Furthermore, the market crypto has already corrected about 50% from its highs. Admittedly, this remains little compared to the 80-90% to which he has accustomed us. However, the structure of this market is precisely changing. More than ever the bullrun of 2020-2021 will have been that of the entry into the track of institutional investors. A growing number of companies now have bitcoins in their treasury, this is the case of Tesla, MicroStrategy or even Block. Players who have every interest in ensuring that the market does not unscrew too much.
Also, there doesn’t seem to be any panic selling like there was the other times. During the last two bear markets in 2014 and 2018 the market took only between a year and a year and a half to fall by 85%.
However, we are now one year away from the high point of April 2021 and the market does not seem to panic. It is rather entering a phase of stagnation between $30,000 and $70,000. A phase never seen before on the cryptos.
Between geopolitical problems, health concerns and economic uncertainties, it is clear that the cryptos will have a role to play. Which ? That’s the whole question. Ultimately, the technological innovation represented by the blockchains are in great danger of taking over our economic model. Very clever whoever can say where the market for cryptos in the next 6 months.