Billionaire investor and DoubleLine Capital CEO Jeffrey Gundlach says he would certainly not buy cryptocurrencies at the moment given the current bearish market conditions. He justifies this by saying that the Fed may go too far in its moves.
Investors' fears of the effects of the Fed's monetary tightening efforts led to a $2 trillion market rout for cryptocurrencies.
A more aggressive path of interest rate hikes will be required to confront increasingly entrenched inflation, according to Nomura economists, who revised their prediction for the Fed's September meeting from a 75 to 100 basis point increase on Tuesday.
Gundlach declared that he concurs with the predictions, including that of a 20% drop in stock prices by mid-October, made by Guggenheim's Scott Minerd.
After the August consumer price index report came in higher than anticipated on Tuesday, stocks also declined, and Bitcoin plummeted along with them. On Tuesday, the cryptocurrency dropped by about 11%, reaching a low of $19,855. Since June 18, this was the worst day for Bitcoin.
Prior profits have been reversed by the falling price. Bitcoin rose to a one-month high of $22,800 on Tuesday morning before dropping. As Wall Street prepared for more aggressive interest rate increases from the Federal Reserve, stocks experienced a dramatic decline following the risk-off mode of the market.
Bitcoin is currently trading at $20,330 at press time.
Bitcoin may not have bottomed - Analyst
Cryptoanalyst Willy Woo believes Bitcoin is still far from reaching a bottom. In a thread of tweets, the analyst noted that Bitcoin has not yet seen an accumulation that matches that of prior bottoms. Also, in terms of max pain, the market has not felt the same pain as prior bottoms.
He wrote: "In terms of max pain, the market has not felt the same pain as prior bottoms. We have only reached 52% of coins being underwater so far. Prior bottoms were 61%, 64%, 57%."