- Strategic Wealth Partners’ Luke Lloyd told Insider he sees a massive correction ahead for bitcoin.
- Lloyd said regulation fears will be the catalyst for a fall all the way to $24,000.
- But he said he thinks its price will recover and surge to $100,000 by the end of the year.
- Visit the Business section of Insider for more stories.
Luke Lloyd is an outspoken bitcoin bull when it comes to his long-term outlook.
So it might have come as head-scratching news to some when the investment strategist and wealth advisor at Strategic Wealth Partners said on Fox Business’ Varney & Co. that he’d cashed out of the cryptocurrency when it hit $40,000 for the first time in January.
For one, speculation was running rampant at the time, driving bitcoin’s price relentlessly upward, which concerned Lloyd that a pullback would come.
But there was another fear Lloyd had: regulation.
He was anticipating — and still is — that regulators like the Securities and Exchange Commission and lawmakers would take steps to control bitcoin, causing investor concerns that would sink its price to $24,000 per coin.
Serious regulation concerns never developed, though bitcoin still dipped as low as $28,000 in the weeks afterward as speculation cooled.
Even so, Lloyd held off from buying back the cryptocurrency when the drop happened, causing him to miss out on it’s rise back to $58,000.
But he remains cool-headed. His strong conviction about a regulation-driven sell-off is one reason he kept his cash on the sidelines. He believes that sometime in the first half of this year regulatory developments, like the prospect of Congressional hearings on the cryptocurrency, will start to spark fears and bearishness about its future.
But further, he said his technical analysis of bitcoin shows that it’s due to drop to $24,000.
“Bitcoin has anywhere from 50-70% corrections pretty often,” Lloyd told Insider on Tuesday. “If we pull up the chart from the recent highs of around $58,000, and we apply roughly that 58% correction, I’m looking at that $24,000 mark.
“The reason why I apply 58% is because I’m looking at where bitcoin started to break out from a technical standpoint,” he continued. “We saw a lot of people start buying bitcoin around that $24,000 mark, driving the price up all the way up to $40,000 within that week or two.”
He added that breakout points — when demand picks up at a quick pace — tend to act as support levels in the future when falls occur, and that bitcoin’s price action tends to return to these points.
Lloyd also said technical analysis, or analysis of price patterns, matters more for bitcoin than for other assets because it lacks intrinsic value and is therefore driven only by supply and demand.
Bitcoin’s price has started to drop since it peaked this past Sunday, thanks in part to Elon Musk’s tweet saying that bitcoin and Ethereum, another cryptocurrency, “do seem high.” It now sits at around $49,000.
Surge back to $100,000
But after the drop that Lloyd expects, he believes bitcoin will recover and rise all the way to $100,000 by around the end of 2021. He added it could reach $200,000 in the next couple of years.
Lloyd said he believes companies will continue to add it to their balance sheets, following the lead of firms like Tesla and MicroStrategy. This would not only normalize adoption of the asset, but would lessen its supply, presumably upping its price.
Along these lines, Ark Invest’s Cathie Wood said earlier this month her research shows that if all 500 companies in the S&P 500 make bitcoin 1% of their balance sheets, its price will rise by $40,000.
Lloyd said that companies’ fear of missing out will lead them to buy it.
“It’s too big to ignore at this point,” he said. “At $1 trillion size, there’s too much money in this to where people are going to be getting more involved. Institutions are going to want to have an allocation of bitcoin. Companies are going to want to have a little bit of bitcoin, just because FOMO’s really kicking in right now.”
He also said that while he thinks regulation fears will trigger a sell-off in bitcoin in the near-term, regulation itself will be good for it in the long run, assuming the government doesn’t outright ban it.
“Regulation would actually mean the government is acknowledging it and if they back it in anyway would help build more trust around it,” he said in a follow up message Wednesday.