Billionaire investor Jeff Gundlach told CNBC he would not be surprised if bitcoin plunged to $ 10,000.
The “Bond King” pointed to “blow-ups” in crypto that helped drive a fall in bitcoin to just above $ 20,000.
Worries about the financial health of hedge fund Three Arrows and lender Celsius have shaken confidence.
Billionaire investor Jeff Gundlach says it would not surprise him if bitcoin falls further to hit $ 10,000, after a series of “blow-ups” that have raised worries about the stability of crypto markets.
The world’s largest cryptocurrency by market cap has fallen to trade around 18-month lows over the past five days, and threatened to break below $ 20,000 Wednesday as investors fretted about recent industry events and Federal Reserve tightening.
“When it broke below $ 30, it looked on a chart basis $ 20 was going to happen quickly, and it did. The trend in crypto is clearly not positive,” Gundlach told CNBC on Wednesday, referring to the $ 30,000 and $ 20,000 levels.
“It looks like it’s being liquidated. I’m not bullish on that $ 20,000 or $ 21,000 on bitcoin. I would not be surprised at all if it went to $ 10,000,” he said in a “Closing Bell” interview.
Bitcoin fell to $ 20,378 immediately after the Fed announced its biggest interest-rate hike since 1994 on Wednesday, but rebounded back above $ 21,000. It was trading at $ 21,693 on Thursday, up about 6% in the last 24 hours, according to CoinMarketCap data.
The DoubleLine Capital CEO – whose nickname is the “Bond King” – pointed to recent events in the crypto world that have been spurring the broad crypto market rout, the second this year.
“We’ve already seen around the edges some blowups in parts of the crypto world, and that could be foreshadowing some problems,” Gundlach said.
The latest issue to get investors’ attention is uncertainty around influential crypto hedge fund Three Arrows, after its CEO Su Zhu on Tuesday tweeted“We are in the process of communicating with relevant parties and fully committed to working this out.”
Speculation has been growing around Three Arrows, which has been steadily building a holding in the Greyscale Bitcoin Trust, according to a Bloomberg report. The hedge fund is facing possible insolvency after up $ 400 million in lender liquidations, The Block reported Wednesday.
The situation put further pressure on bitcoin and the wider digital asset market, already rattled by leading crypto lender Celsius Network’s move to freeze withdrawals and other account activity, citing extreme market conditions and volatility. The halt sparked concern Celsius was heading for insolvency, highlighted by the firm’s reported decision to hire restructuring lawyers to help advise on its mounting financial issues.
The market was on alert after the price collapse of terraUSD and its sister token luna in May, after Terra’s stablecoin lost its peg to the dollar and went into a “death spiral” that shook investors’ confidence in the stability of the crypto market.
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