Bitcoin has had a tremendous run in the last couple of days, the world’s foremost cryptocurrency has gained nearly a $1,000 since the beginning of this week as prices climbed from around $6,700 to a high of $7,500.
The recent price gain has sparked hopes among crypto enthusiasts of a bull run similar to the one that saw bitcoin trade for nearly $20,000 in December 2017. But one expert is saying the worst days are not over yet and bitcoin’s price will still bottom at between $3,000 to $5,000 before an eventual market rally.
BitMEX CEO and co-founder Arthur Hayes believes the price of bitcoin would plunge to around $5,000 region before initiating the next rally. Speaking on CNBC’s Fast Money on Thursday, Hayes said the current price rally would be short-lived, peaking at only about $10,000. After this point, Hayes expects another massive drop that will see bitcoin set a new low for 2018.
“I don’t actually think we’ve seen the worst. I would like to see us test $5,000 to really see if we put a bottom in. But come back in Q3, Q4, I think is when the party is going to start again.”
Hayes explains that the bottoming process would also be short lived as prices would climb to about $50,000 before the end of 2018 triggered when the authorities in the U.S or other leading markets such as Japan and South Korea issue a key regulatory change.
“I think something [bitcoin] that goes up to $20,000 in one year can have a correction down to $6,000. I think we can find a bottom in the $3,000 to $5,000 range, but we are one positive regulatory decision away, maybe an ETF approved by the SEC, to climbing through $20,000 and even to $50,000 by the end of 2018,” Hayes said.
Hayes’ opinion is shared by a number of crypto experts including TenX co-founder Julian Hosp who in the middle of last year’s bull run famously predicted that prices would fall to $5,000 before rising to $60,000 by the end of 2018.
Some studies have shown that, the cryptocurrency market periodically experiences a pattern of volatile upswings that Coinbase CTO Balaji Srinivasan has described as Bubble-Crash-Build-Rally.
Since 2010, the cryptocurrency market and major digital assets within it reach a new all-time high, creates a bubble and then crashes significantly by 70 to 80 percent. But following each crash, stakeholders work to build strong infrastructure to handle increasing demand, and the market recovers again.