Bitcoin risk of 75% collapse: analysts refute Peter Brandt’s scenario

The risk of a 75% Bitcoin crash has come back into the spotlight following recent speculations by Peter Brandt, a veteran trader who suggested a repeat of the dramatic decline of 2022. 

However, many crypto analysts consider this eventuality very unlikely, highlighting crucial differences between today and the situation of a year ago.

Bitcoin Analysts and Peter Brandt: An Unlikely Scenario for Macroeconomic Reasons

In November 2021, Bitcoin reached its all-time high around 69,000 dollars. Since then, it has undergone a severe correction, of about 76% in the following twelve months, which brought it down to 16,195 dollars by November 2022. 

This decline has been one of the most marked in the recent history of the most well-known financial asset in the crypto sector.

Peter Brandt has reignited the debate by suggesting that Bitcoin could follow a similar negative trend. In his post on X (formerly Twitter) he asked:

“Is Bitcoin following its 2022 script and preparing for a 75% drop? It doesn’t hurt to ask, does it?”

If this scenario were to occur starting from the current approximately 107,810 dollars, Bitcoin could drop again to levels of around 26,000 dollars, a figure not seen since the end of 2023.

Pav Hundal, head analyst at Swyftx, responded to the scenario hypothesized by Brandt, calling it “very unlikely at the moment.”  

According to Hundal, macroeconomic conditions have radically changed compared to 2022.  In 2022, the global economy was facing the consequences of the return to normality after the pandemic. 

At the time, the printing monetario policies and fiscal stimuli had created a very volatile market environment. That context had significantly contributed to the strong bear of Bitcoin and other assets.

Today, Hundal explains, these policies have been revised with a more restrictive and less expansive approach, which makes a drop similar to that of the past year unlikely.  

The role of young investors in 2021

An additional element of differentiation is represented by the behavior of investors in 2021. 

A 2021 survey showed that one in ten Americans aged 18 to 34 had invested part of their economic stimulus in cryptocurrencies, thus fueling speculative demand.

Today, the market appears more mature and less influenced by external stimulus factors, contributing to stabilizing the price of Bitcoin.

Other analysts like Andy Edstrom and Simon Amery share some of Brandt’s concerns, but they do not believe that a correction could be so severe as to reach 75%.  

Edstrom emphasizes that the crash of 2022 was not just a generic market phenomenon, but was exacerbated by the collapse of FTX, a prominent crypto exchange. 

FTX did not complete several customer orders, instead selling “BTC cartaceo,” meaning Bitcoin indirectly or not actually owned, causing panic and strong sell-offs.

Furthermore, the bear cycle of 2022 was driven by a more hawkish monetary policy from the Federal Reserve, which increased interest rates to counteract inflation, penalizing riskier investments like Bitcoin.

In the present, although the economic situation remains complex, the intensity of the 2022 crisis is not observed. The actions by the Fed show a more balanced approach, reducing the likelihood that Bitcoin will face such a severe collapse.

Michael Saylor, well-known entrepreneur and supporter of Bitcoin, rejects the hypothesis of a new “crypto winter”.

“Winter will not return,” he stated, explaining that if Bitcoin does not reach zero (an event considered highly unlikely), it could even reach a million dollars in the medium to long term.

This optimistic view reflects the growing confidence in institutional adoption and in the role of Bitcoin as a store of value, similar to gold.  

Bitcoin today: between volatility and growth potential

Despite Peter Brandt’s call for attention having raised a certain level of concern, the majority of analysts agree that the current market conditions do not foreshadow a collapse replicating 2022.  

Factors that support the stability of Bitcoin

• – Greater market maturity: more experienced investors and partially defined regulations.
• – Different macroeconomic conditions: more restrictive monetary policies and fewer direct stimuli.
• – Absence of systemic shocks similar to FTX: which in the past have amplified the bear markets.

It is still necessary to consider that Bitcoin remains a volatile asset and sensitive to changes in global policies or shocks in the crypto sector. 

Therefore, investors must maintain a cautious attitude and closely monitor the evolution of economic and regulatory factors.

The scenario of a 75% crash in Bitcoin remains, at the current state, a remote possibility, but not completely to be excluded. 

The analysts agree on a prospect of greater stability and growth potential, but recommend not to underestimate the volatile nature of this financial asset.

As a result, those who invest in Bitcoin should adopt long-term strategies, staying informed and adapting their choices to market conditions and economic news. 

Attention to macroeconomic, regulatory, and technological dynamics will be increasingly crucial to successfully navigate the crypto world.

In summary, Bitcoin continues to represent a valid opportunity, however, it is subject to specific risks that need to be managed with awareness and preparation.