Former Morgan Stanley top manager, Rockefeller International CEO and The New York Times columnist Ruchir Sharma compared Bitcoin to early Amazon and gave his market growth forecast. This expert is quite far from the crypto scene, but more interesting is his rather positive prediction about the fate of Bitcoin. The following is a brief retelling of key points from a recent interview with this prominent financier.
Why the fall was inevitable?
- In the early 2000s, the dot-com crash caused the e-commerce giant Amazon’s stock to drop ~90%, but in the next 20 years, its value has risen more than 300 times. Ruchir Sharma believes Bitcoin is following a similar scenario. BTC’s fluctuations are normal because the market is in the initial stage of growth.
- Digital gold is a good idea that has been spoiled by too much cheap money in the market and high speculative interest. According to the expert, Bitcoin is still caught up in a “speculative mania.” Which means it’s going to take some time to get the leveraged speculators out of this asset. This will be accompanied by pain and fear, bankruptcies and loss of fortunes.
- Bitcoin needs to get rid of excess leverage to become sustainable again. Too much stray money and speculators have come into crypto lately, using derivatives to push crypto prices to the level of a bubble. This has created large imbalances. Therefore, the current market decline is an inevitable and beneficial cleanup before a new growth cycle.
About the bottom and the market reversal
- Over the next six months, against the background of a decline in the stock market, Bitcoin may experience further fluctuations and falls, but in the future, it will return to its ATH, the expert believes.
- The expert reminded that the average bear market on Wall Street lasts about a year, during which the drawdown reaches an average of 35%. The timing criterion has not been met at this point, so far the pullback from the ATH was 20%. But the bottom of the crypto market is near.
About the future of the crypto market
- The expert is sure that after clearing through the deleveraging stage, Bitcoin will be able to set new price records. He assesses the future of Bitcoin as positive.
- Sharma admitted the likelihood of the U.S. dollar being replaced by Bitcoin as the world’s reserve currency in five years if Bitcoin’s volatility declines. Against the background of growing problems with the U.S. economy, he evaluates this probability as very real.