Analyst who successfully predicted the current cryptocurrency crash predicts again: Bitcoin will rebound sharply

A statistician who accurately predicted that Bitcoin would quickly collapse amid the global economic crisis is now predicting a sharp price rebound.

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Analyst Willy Woo, who predicted in 2018 that investors would liquidate their leveraged Bitcoin positions to seek the safety of the U.S. dollar, said the cryptocurrency was finding a bottom.

He tweeted at the time:

“We are now flying to safety and BTC is finding a bottom. But know that once the bottom is reached, there will be strong bullish pressure. Bitcoin is built to play in the economic environment of the next few years.”

Last week, the Bitcoin market was in a slump, with the cryptocurrency's spot price suffering its worst day since 2013. Traders preferred to close their positions at a loss, fearing uncertainty as the coronavirus pandemic escalated. Such volatile liquidations caused the net valuation of Bitcoin to drop from about $190 billion to as low as $83.57 billion.

The plunge has disappointed a large segment of investors/speculators who saw Bitcoin as their insurance against a stock market crash. Well-known market commentator Alex Krüger said on Tuesday that Bitcoin acts neither as a store of value nor as a safe haven.

A familiarity with gold

Mr. Woo believes that Bitcoin behaves like gold during the bursting of the real estate and credit bubbles. Although the stock market crash increased the chances of gold as a safe-haven asset, gold plunged as much as 33.96% in 2018. However, investors turned to other unconventional hedging assets, mainly the US dollar.

Gold hit a bottom of $681.75 in October 2018, followed by a steep uptrend that saw its value rise to $1,703.60 in early March this year. Nevertheless, the coronavirus-induced sell-off prompted the metal to rebound by as much as 14.80%. It looks like Bitcoin is plunging in a similar fashion.

Woo reminded investors:

“Flight to safety: Everything else is sold in USD. [Then] it’s used to close out leveraged positions. Afterwards, safe havens like gold and Bitcoin see a bull run.”

Bitcoin Black Swan

Some of Woo’s old predictions also mentioned black swan events and their impact on Bitcoin’s price. The analyst said that we cannot guess the future price under unexpected events. The coronavirus has proven to be a black swan event.

Woo noted that Bitcoin is in its first macro bear market due to the unexpected viral epidemic. This leaves analysts with little data to find its price in the short or long term. Nevertheless, the statistician said that declining investor confidence in the banking industry will at least push millennials toward decentralized assets.

Woo said:

“This crisis is the catalyst for this heartbreaking outcome. $680 trillion in wealth is now accelerating to millennials. Millennials love cryptocurrencies and they can get market movement without spending a lot of money.”