As the Crypto Winter intensifies, Bitcoin could break below its $18,000 support level, which will send the Bitcoin price tumbling to as low as $6,000, said Florian Grummes, Managing Director at Midas Touch Consulting.
“At some point I expect that this $18K support level will break, and then we could actually lose quickly another 30, 40, or 50 percent,” he said. “It would be the worst case that we go down to $6K.”
Over the year, Bitcoin’s price has fallen by 60 percent, and Ethereum has dropped by 65 percent. Grummes said that recovery will occur in 2023, and that 2024 could be “the start of a new bull market” as Bitcoin Halving occurs.
Grummes spoke with Michelle Makori, Editor-in-Chief and Lead Anchor at Kitco News, at the Future Blockchain Summit in Dubai.
Crypto Winter Outlook
The bear market in cryptocurrencies caused a string of company failures, such as DeFi firm Celsius, crypto fund 3AC, and blockchain company Terraform Labs.
Terraform Labs, for instance, experienced a collapse in its stablecoin TerraUSD (UST) and its native token Luna, which wiped out $45 billion in market capitalization within a week.
These failures are needed to cleanse the crypto market of inefficient or fraudulent companies, said Grummes.
“There has been so much scam, and so many bad projects in this sector, and we have to get rid of them,” he told Makori. “It’s very painful, I understand, especially for those who are hodling, but it needs time to weed out all these bad actors.”
However, Grummes said that based the timespan of previous bear markets, a recovery is expected in 2023.
“Usually crypto winters last 20 to 27 months so expect another half-a-year at least, or maybe a year, and then the Bitcoin halving in 2024 will bring some light, and maybe the start of a new bull market,” he explained.
The Bitcoin Halving will cut in half the supply of new Bitcoins, as well as the reward for mining them. This is expected to make Bitcoin more valuable, and could have positive contagion effects that benefit altcoins.
Digital Slavery
Grummes pointed out that despite the Crypto Winter, nations are developing their own official digital currencies, which would be controlled and issued by central banks. The Federal Reserve, for instance, intends to release its own digital token, FedCoin.
Critics of these “central bank digital currencies’ claim that CBDCs would invade privacy and be used to financially punish political dissidents, since the government would be able to fully track, trace, and control these digital tokens.
According to the Atlantic Council, 105 countries are developing CBDCs.
“If CBDCs happen, we are all going to be digital slaves,” said Grummes. “They are trying to position CBDCs as some form of cryptocurrency, but at the end of the day it’s the same form of money that we have already, except it’s controllable money, similar to what they have in China with the Social Credit System.”
Grummes highlighted the risks of CBDCs to well-functioning democracies.
“If some unelected central bankers can create money out of thin air, and then track how you spend your money, where you spend it and also dictate what kind of interest rates you earn and dictate what you can do with it, I think it’s not a very nice outlook for all of us.”
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