Before the FTX collapse, well-known trader Gareth Soloway had been adamant that the Bitcoin price would be heading lower. This is despite many other analysts saying that the Bitcoin bottom was already in.
In a recent interview, he predicted that the bottom for Bitcoin (BTC) price is still six months away, based on what happened with the Lehman Brothers collapse.
Says Soloway, “When I look at FTX, I see Lehman Brothers. At the time, Lehman was one of the major banks. FTX was one of the major exchanges.”
Lehman was a catalyst that brought about a downturn, and Soloway thinks FTX will serve the same purpose. “Now what’s fascinating about this, is if we go to the S&P 500, to 2008, we can see that when Lehman Brothers occurred, the S&P was not at the bottom. However, the event created that last drop in the market that brought us to the low of 2009.”
Bitcoin price prediction
The trader said events in 2008 have clear parallels to the situation with FTX. “It took about six months from the Lehman Brothers event to get to the lowest point on the S&P 500. So in that thought process, if FTX is the Lehman event of the crypto markets, you’re looking at about five to six months.”
This puts us in April, May or June of 2023.
The stock market advisor said there was a 45% decline from the Lehman Brothers event, to the bottom.
The price of BTC was US$18,500 at the time that FTX went under. If the crypto markets behave the same way as traditional markets, then we can guesstimate that the BTC price will be around US$9k.
“So for me, I start to put the pieces of the puzzle together. You can start to see the similarities developing in this environment versus what happened in the Lehman Brothers collapse. I do think it’s very, very similar. Greed and fear are what rule investors. It’s not fundamentals. It’s greed and fear.”
Soloway’s second phase
While Soloway thinks that this is the first phase that helps drive Bitcoin to its low pivot, there will be a second phase. “When the economy starts to suffer the most will actually be where Bitcoin flips to become a safe haven for assets. And the reason it’s going to flip is that a lot of investors will be looking at the economy getting worse and worse. They will give up on stocks like Apple and Microsoft as the consumer just runs away.”
Soloway says that the FTX debacle is the crypto version of the dot.com crash. “You have to expect a lot of these smaller cryptos to ultimately get flushed out and go to zero. In the dot.com era, we saw the same sort of greed driving this. Some of these companies had no reason to go up to 100-million-dollar valuations — they had to be taken out. And I think that’s exactly what we’ll see here in the crypto market for the next three to six months.”
Anyone can make a Bitcoin price prediction. But this is certainly an interesting one.