Jeffrey Gundlach, CEO of DoubleLine Capital and a billionaire investor, says he would not buy cryptocurrencies in the current bearish market. He defends his position by arguing that the Federal Reserve might go too far with its measures to tame inflation.
Investors’ worries about the effects of the Fed’s efforts to tighten the money supply caused a $2 trillion sell-off in the cryptocurrency market.
On Tuesday, analysts at Nomura raised their predictions for the Fed meeting in September by 75 to 100 basis points.
Guggenheim’s Scott Minerd predicted a 20% decrease in stock prices by mid-October, and Gundlach said he agrees with that prediction and those made by Minerd and others.
Stocks and Bitcoin dropped on Tuesday after a higher-than-expected consumer price index for August. Bitcoin’s value fell nearly 11% on Tuesday, hitting a low of $19,855. This was another bad day for Bitcoin since June 18.
The price drop has taken away any profits that were made before. On Tuesday morning, the price of bitcoin reached a new all-time high of $22,800 before it began to fall.
The risk-off mode of the market led to a sharp drop in stock prices as Wall Street braced for the Federal Reserve’s intention to raise interest rates more aggressively.
Bitcoin Reversal Should Be Close – Analyst
According to on-chain data provided by Willy Woo, just 52% of coins are underwater on the market, which is 5% lower than it should be to classify the present price level as a reversal.
Unfortunately, it’s impossible to calculate the maximum pain price for most markets since traders and investors are spread out between support and resistance levels.
For example, a drop below $20,000 might not cause a lot more coins that don’t make money, but a drop below $19,000 would cause a large number of open positions.
Even though the reversal of Bitcoin seems unlikely, the asset’s value is still going down. This means that the correction should be coming to an end, especially since Bitcoin fell again after CPI data.
The crypto market might recover if the US eases monetary policy.
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