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    One strategist warns that Bitcoin could plunge as low as $13,000 in the near future

    If previous crypto booms are any indication, bitcoin might be on its way down much more. According to one expert, the world’s top cryptocurrency might go as low as $13,000, a plunge of about 40% from present prices.

    “We would still be selling these kind of cryptocurrencies into this climate,” Ian Harnett, co-founder and chief investment officer of Absolute Strategy Research, said Tuesday on CNBC’s “Squawk Box Europe.”

    “It’s purely a liquidity play.” We discovered that it is neither a money, a commodity, nor a store of value.”

    In explaining his negative prognosis, Harnett stated that previous crypto rallies show bitcoin falling around 80% from all-time highs. In 2018, for example, the cryptocurrency fell below $3,000 after reaching a high of around $20,000 in late 2017.

    According to Harnett, such a decline in 2022 “would take you back to around $13,000,” a “important support region” for the token. At the height of the 2021 crypto mania, Bitcoin reached a record high of about $69,000.

    “The bitcoins of this world do well in a world where liquidity is abundant,” Harnett added. “When that liquidity is removed — which is what central banks are doing right now you see those markets come under enormous pressure.”

    The cryptocurrency market is on edge as investors consider the impact of increased interest rates on assets that thrived during a period of ultra-easy monetary policy. The Federal Reserve hiked its benchmark lending rate by 75 basis points last week, the greatest single increase since 1994. The Fed’s decision was followed by similar steps by the Bank of England and the Swiss National Bank.

    This has had an impact on digital assets. In the last two weeks, the total value of all cryptocurrencies has dropped by more than $350 billion. Bitcoin was trading at $20,010 on Tuesday, down 5% in the previous 24 hours. The top cryptocurrency has lost more than half of its value so far this year.

    Before the Fed’s rate rise last week, the crypto market was already on unstable footing, with traders roiled by the $60 billion collapse of popular stablecoin terraUSD and its sister token luna.

    To make matters even more complicated, the decline in the value of a derivative token supposed to be one-to-one redeemable for ether has compounded financial difficulties at significant industry participants such as Celsius and Three Arrows Capital.

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