Pricing forecasts, when to buy crypto in Bear Market: Blockchain founder

This year has been the perfect storm for crypto. At one end, the sector moves through a cyclical

bear market

. On the other hand, economic conditions such as interest rate increases have added a dose of uncertainty.

Richard Heart, the founder of Hex, an ethereum-based token that rewards investors for their efforts, told Insider in mid-May that he expected bitcoin to land anywhere between $ 10,600 and $ 10,350, while ethereum could reach $ 750. His views were far removed from crypto enthusiasts who had requested that bitcoin reach six digits in the last quarter of 2021.

He based his price targets on previous cycles where bitcoin tends to fall by about 85% and eats by 95% during a bear market. Since then, bitcoin has fallen below $ 19,000, with ether falling to around $ 945.

Heart is proud to be able to predict events and price targets. He recalled previous calls he made, including a December 19, 2017, when he tweeted that cash was leaving bitcoin, marking the beginning of the altcoin season. At that time, bitcoin had been trending downward for four days, eventually becoming a bear market.

In September 2021, he tweeted an article about Celsius facing problems in Texas, New Jersey and Alabama for offering unregistered products. He then followed up with one tweet som sa If you put your money somewhere for interest rate returns and the protocol failed, you would lose everything. Heart described the strategy as picking up pennies in front of freight trains. In June, Celsius announced that they were freezing withdrawals due to extreme market conditions. To date, depositors have not been able to reclaim their assets.

The heart knows he is a controversial figure. He named the crowd of Twitter users he says has blocked him, including Microstrategy boss Michael Saylor and Celsius boss Alex Mashinsky. Nevertheless, he maintains his belief that crypto does not belong on exchanges where investors do not have their own keys.

Now, as the market falls, large crypto platforms and funds that invest, provide loans and provide returns like flies fall. The implosion of Terra Luna’s ecosystem was just the beginning of the spiral that would drag down major suppliers such as Celsius, Voyager and even veteran funds such as Three Arrows Capital.

4 reasons for new, lower forecasts

Heart thinks the shakeout is not over yet. In fact, he circles back on his previous price forecasts with an even bolder prediction. Unique economic circumstances and a heavily leveraged environment can cause bitcoin to hit $ 5,000 and eat $ 550 or $ 500, he said.

His target prices are based on four factors, the first of which is the recurring strength of the US dollar. Heart noted that the dollar is becoming more expensive and reaching 30- to 40-year highs against all other currencies. When this happens, everything priced in dollars, including bitcoin, is inverted, he noted.

“When you have bitcoin against the dollar, but the dollar is not worth the shit, it’s very easy to go up,” Heart said. “But when you have bitcoin against the dollar and the dollar is worth a lot now because everything else goes down against the dollar and they finally stop printing them, for the first time in bitcoin’s existence, now you can go lower than 85%.”

The other factor is interest rate hikes that have also pulled the price of bitcoin down, he said. Since

Federal Reserve

announced the second rate hike in this cycle on May 4, bitcoin has fallen by around 50%. The crypto has become increasingly correlated with the stock market, which is inversely correlated with interest rates, he noted. As long as interest rate increases continue and

liquidity

being sucked out of the market, the price of bitcoin will continue to fall.

“Bitcoin has never existed at a time when fiscal policy has been tightened. It has never happened before,” Heart said.

Thirdly, he points to the impending doom that awaits the crypto market that may come from a stock of bitcoin that may soon be up for liquidation. The US government can back up a truckload of its own seized stock, around 70,000 BTCs, to the market. The bitcoin, which was seized from an unnamed hacker, will be used to cancel the amount Ross Ulbricht, founder of Silk Road, was ordered to pay as part of the sentencing.

Then there is the Tokyo-based bitcoin exchange, Mt. Gox, which imploded in 2014 after it was revealed that bitcoin was missing or stolen from the platform. Creditors received good news on July 6, and noticed that payments begin. This will add another 142,000 BTCs that can be retrieved if creditors decide to dump their luggage. Although Heart does not think it will be fully sold out, there is a chance that a large part may be for sale.

Fourth, Heart noted that this bull run saw bitcoin make a double peak, which is when the price of an asset peaks twice in a short period of time, Heart noted. Technical analysts use it as a signal for a bearish reversal pattern. A double peak is something bitcoin has not done before, he said, and he thinks it was caused by an excessive amount of influence that inflated the price. This will delay the migration of bitcoin to the bottom, he added.

His advice to investors: You have to wait for the actual bottom. From a time perspective, the previous bear market lasted a year to the day, he noted. But this round’s double peak means that it is a few more months before we see price support. However, he emphasized that this did not take into account interest rate increases, which could delay the bottom even further.

Still, he still stands by his previous belief that if investors buy bitcoin for $ 11,000, it’s a good deal, even if it drops another 50%.

In the case of ether, the same market-driving factors that will pull bitcoin further down will also have an impact on the price of the ether, bringing it to a target price as low as $ 500, he added.

And when it comes to other altcoins, Heart is not a fan. He does not believe that blockchain technology should be used in all industries.

“Blockchains are the world’s most expensive, slowest databases,” Heart said. “They are absolutely rubbish. They have no throughput. They have extremely high costs. They are the most inefficient databases ever invented in history.”

He continued, “We are willing to endure that fear and that pain for one reason, and one reason alone, censorship resistance. And so unless what you do requires censorship resistance, you would be better off doing it in any other way you could think. an Excel spreadsheet, an Oracle database, an SQL database, everything. ”