Bitcoin is heading towards a bear market and may not recover until 2025, Huobi co-founder Jun Do has said.
The exchange released a report last Friday which argues U.S. tapering will lead to a depreciation in the price of bitcoin in the coming months.
Tapering occurs when the Federal Reserve slows down the purchase of new assets such as bonds and mortgage-backed securities.
A corollary of tapering is a reduction in global liquidity. As bitcoin is susceptible to major changes in liquidity, it faces a major decline in value.
Additionally, a rise in interest rates will put added downward pressure on the price of assets perceived as carrying greater risk.
Huobi co-founder Jun Do told CNBC: “It is really hard to predict exactly because there are so many other factors which can affect the market as well — such as geopolitical issues including war, or recent Covid, also affect the market.”
“Following this cycle, it won’t be until the end of 2024 to the beginning of 2025 that we can welcome the next bitcoin bull market.”
Bitcoin hit an all-time-high of almost $69,000 in November, but since then has lost ground and is currently trading below $37,000.
Bitcoin’s drop this year coincides with an 8.8% slide in global stocks. It is argued that as more institutional money flows into digital assets, the more interlinked with traditional markets the price becomes.
Bitcoin grew 59.8% last year, while the total market cap of all cryptocurrencies grew by 187.5%.