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Peter Brandt Warns of Crypto Stagflation as Bitcoin Price Dips

Last Updated April 29, 2024 7:24 AM
Teuta Franjkovic
Last Updated April 29, 2024 7:24 AM
By Teuta Franjkovic
Verified by Peter Henn

Key Takeaways

  • Bitcoin Price Might Have Peaked, suggests veteran trader Peter Brandt.
  • Brandt attributes the potential decline to “exponential decay,” a historical trend in Bitcoin’s price cycles.
  • The broader market is experiencing a downturn due to stagflation fears, which is reflected in a decline in Bitcoin’s price.

Veteran professional trader Peter Brandt suggests  that Bitcoin might have reached its peak at a new all-time high of $73,835.

He indicates it could fall to the mid- $ 30,000s or even lower. Intriguingly, Brandt considers such a decline to be extremely positive for Bitcoin’s long-term outlook, despite the possibility of stagflation.

Bitcoin Bleeds as Risk Assets Plunge Amid Fears of US Stagflation

Amid fears of US stagflation, crypto markets are experiencing downturns, significantly affecting risk assets.

Bitcoin, the foremost cryptocurrency by market capitalization, is trading around $63,093, marking a 4.6% decline over 24 hours, as per CoinMarketCap . Currently, the market is at a critical juncture, weighing potential bullish and bearish futures.

In a recent blog post , veteran trader Peter Brandt posits that Bitcoin (BTC) may have topped out for the current bull cycle. Brandt anticipates a potential decline to mid-$30,000 levels or even to lows reminiscent of 2021. He attributes this expected downturn to a phenomenon known as exponential decay , particularly after Bitcoin hit a new all-time high of $73,835.

Based on analysis of the last four BTC bull cycles, Brandt concludes that about 80% of the exponential energy from each cycle has been lost. Moving forward, Brandt predicts that the next exponential advance could be approximately 4.5 times the current value of Bitcoin.

BTC decay
Credit: Peterbrandt.com

Veteran Trader Sees BTC Repeating History with Potential Downturn

While recognizing the potential positive impact of Bitcoin’s halving, Peter Brandt says traders need to monitor exponential decay. This is when a price drops at a rate proportionate to its current value.

He said :

“For now we need to deal with the fact of Exponential Decay. It has happened. It is real. You may not want to believe it, but I place a 25% chance that Bitcoin has already topped for this cycle.”

Despite contradicting the projections of many Bitcoin enthusiasts, Brandt suggests a decline in BTC price could be the “most bullish thing” from a long-term perspective. He compared this to gold’s performance from August 2020 to March 2024. Brandt also admits his reluctance to accept this outcome but emphasizes that the compelling data cannot be ignored.

BTC vs Gold
Credit: Peterbrandt.com

Stagflation Spooks Bitcoin: Analyst Says Crypto Could Face Downturn

Neil Roarty, analyst at investment platform Stocklytics, commented on stagflation fears affecting Bitcoin. He also explained that concerns about the United States potentially entering a period of stagflation might be contributing to a lackluster performance for Bitcoin over the past few days. During this time, Bitcoin has experienced a decline of approximately 6% in its value.

He noted:

“Stagflation – that toxic mix of low growth and high inflation – is the talk of Wall Street at the moment after the Commerce Department reported that US GDP growth for the first quarter of the year was well below expectations. Combined with an uptick in inflation, concerns are mounting.

With Bitcoin increasingly institutionalised, traders will be keeping a close eye on how both the Fed and the Treasury react. With riskier assets tending to fall harder during times of uncertainty, it could be bad news for Bitcoin if the clouds continue to gather.”

Weak GDP and Rising Prices Squeeze Fed Options

Crypto trading firm QCP said  the threat of stagflation, high inflation combined with low economic growth, was a significant concern.

According to the note :

“The weaker than expected [US] GDP print points to a more sluggish economy while the higher Core PCE warns of an inflation problem that continues to be a thorn in the Fed’s side.”

Last week’s US GDP report  indicated the world’s largest economy expanded at an annualized rate of 1.6% in the first quarter of this year, a slowdown from the 3.4% growth rate in the previous quarter. Additionally, the personal consumption expenditures price (PCE) index , the Federal Reserve’s favored measure of inflation, revealed prices increased at a 3.4% annual rate in the first three months of the year, up from 1.8% in the last quarter of 2023. This combination of slower growth and persistent inflation has diminished the likelihood of Federal Reserve rate cuts.

Most traders in the Polymarket  prediction platform, think no rate cuts is the most probable scenario, with a 35% likelihood. However, the probability of seeing at least one rate cut is gradually increasing, now at 29%. This is up from 26% a week ago and from 14% at the beginning of the month.

QCP also noted  that Janet Yellen’s fiscal strategy, which involves using the Treasury General Account (TGA)—holding nearly $1 trillion in assets—and the Reverse Repurchase Program (RRP) with $400 billion, has the potential to inject up to $1.4 trillion in liquidity into the financial system. This infusion could lead to a significant increase in the value of all risk assets.

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