The crypto market is in a "phase of despair". Why does one strategist believe bitcoin will fall to zero?
On the night of Feb. 6, the value of bitcoin briefly approached $60,000 for the first time since October 2024
Bitcoin has already lost almost half of its value since its peak last year / Photo: Shutterstock.com
Richard Farr, chief market strategist and partner at Pivotus Partners, gave a grim outlook for bitcoin on social network X - its target price for the largest cryptocurrency is now set at zero.
"Our target price on bitcoin is 0.0. Not with the purpose of shocking anyone. This is the result we get from the math
Farr noted that he agrees with the views of iconic short-seller Michael Burry, who predicted the 2008 mortgage crisis. Burry wrote on his blog this week that bitcoin has proven to be a "purely speculative" asset, not a hedge against inflation like gold and other precious metals. So unlike other asset declines, a prolonged bitcoin collapse could trigger a cascade of forced liquidations of positions, which Burry said would set off a "death spiral" and lead to huge losses.
"Bitcoin hasn't worked as a hedge of dollar risk - it's essentially just a speculative instrument correlating to the Nasdaq index. It's not gaining traction as a medium of exchange. No serious central bank would ever own an asset in which [Strategy founder] Michael Saylor controls the free float. The miners (which is what the network is) are losing money. As a payment mechanism, bitcoin is horribly inefficient and uses colossal amounts of energy. There is nothing green about this coin. We believe its value is zero."
Context
On the night of February 6, the value of bitcoin briefly dipped below $61,000 for the first time since October 2024. According to CoinMarketCap, bitcoin was worth $60,074 at its low, but rebounded above $66,000 by morning.
The day before, on February 5, bitcoin was still trading above $70,000. But the breakout of the psychological mark amid stock market turbulence triggered a cascade of leveraged position liquidations and exacerbated the sell-off. As a result, all of bitcoin's growth since Donald Trump's re-election, which sparked a speculative frenzy around cryptocurrencies, has been erased, Bloomberg notes.
Bitcoin has been in a steady downtrend for more than three months and has lost almost half of its value since its peak in October last year. Since January, amid growing geopolitical tensions and reduced risk appetite, the decline has intensified, which triggered a cycle of sell-offs: funds sold off assets to fulfill redemption requirements and closed leveraged positions, Bloomberg describes. According to the agency, only last month about $2 billion was withdrawn from spot exchange-traded funds (ETFs) on bitcoin, and for three months the outflow amounted to more than $5 billion.
"In our view, the sustained sell-off signals that traditional investors are losing interest in cryptocurrencies and general pessimism about them is growing," said Deutsche Bank analyst Marion Laboure in a note quoted by CNBC.
"The fear and uncertainty in the market is evident," Chris Newhouse, head of business development at Ergonia, told Bloomberg. - Without buyers willing to act on their convictions and buy the dip, each wave of ETF outflows and liquidations adds to the pressure." He said this "increases the magnitude of each new decline and reinforces a defensive posture that leaves organic demand untapped."
"The market is driven by momentum right now. Typically bear markets in cryptocurrencies end in apathy rather than despair," said Ryan Rasmussen, director and head of research at Bitwise Asset Management. - We are now in the desperation phase of the current downturn."
This article was AI-translated and verified by a human editor
