Navellier & Associates founder Louis Navellier has predicted that Bitcoin could endure a grueling 80% correction.
The U.S. Federal Reserve tapering its bond purchase program will be the biggest headwind for the cryptocurrency, according to the prominent money manager:
The Fed is tapering, and this should create a correction in risk assets, of which bitcoin is a part. The more the Fed tapers, the more volatility we should see in both stocks and bonds — and yes, bitcoin, too.
Bitcoin has been range-bound over the past two weeks, failing to gain a footing above the $59,000 resistance level on seven occasions over the past two weeks.
At press time, the flagship cryptocurrency is changing hands at $56,676 on Bitstamp. It is down roughly 17.5% from its record high.
A scary pattern
Navellier believes that Bitcoin could end up forming a scary double-top pattern if it continues sliding lower.
The top cryptocurrency plunging below the $28,500 level should be a big red flag for bulls.
In such a case, a double-top formation would be confirmed, and Bitcoin would be on track to collapse back into four-digit territory.
Such a correction would be in line with Bitcoin's previous drawdowns:
I would take a decline below $46,000 (the 200-day moving average) to be a yellow flag and a decline below the spring low of $28,500 to be a completed massive double top which points to a decline to below $10,000, which incidentally would match many of the multiple 80%+ declines in its storied history.