Bitcoin’s meteoric rise this year could be headed for a steep decline, according to Dan Dolev, a top analyst at Mizuho Securities. Despite a 48% surge in Bitcoin’s price since the beginning of the year, Dolev predicts a significant drop, potentially halving its current value to around $30,000. He attributes the recent price rally to a classic case of FOMO (fear of missing out) among investors, which he believes is unsustainable in the long run.
During a recent interview with CNBC, Dolev expressed skepticism about Bitcoin’s underlying value and its current market trajectory. “Right now it’s doing well, but I still think longer-term it has no yield support, it’s basically just FOMO, and I think eventually it’s going to go down,” he explained. According to Dolev, Bitcoin could easily slip back to the $40,000 or even $30,000 range once investor enthusiasm wanes.
Moreover, Dolev doesn’t rule out an even more drastic downturn, suggesting that Bitcoin could plunge as low as $20,000 during what he calls the next “ice age” for crypto. This would represent a staggering 69% decline from its current levels around $64,750.
This bearish outlook comes at a time when Bitcoin has been buoyed by several factors, including the launch of nearly a dozen spot bitcoin ETFs in January and heightened anticipation for the cryptocurrency’s next halving event. Additionally, initial expectations of rate cuts from the Federal Reserve had contributed to the rally.
However, recent inflation data has tempered expectations for aggressive rate cuts, with the Federal Reserve likely to maintain higher interest rates to combat persistent inflation. The CME FedWatch tool now indicates an 84% chance that the Fed will implement two or fewer rate cuts this year, a sentiment that could undermine some of the speculative demand for Bitcoin.
Despite Dolev’s grim forecast, other market observers remain bullish on Bitcoin’s potential. For instance, analysts at Bernstein have recently projected that Bitcoin could reach as high as $150,000 by mid-2025, suggesting a possible upside of 129% from current levels.
As Bitcoin navigates this complex financial landscape, investors are advised to brace for potential volatility and divergent viewpoints on the cryptocurrency’s future value and stability.