Bitcoin price action is approaching bubble territory

DoubleLine Capital CEO Jeffrey Gundlach warned Monday that Bitcoin could be overheated after its massive run in recent months.

“I don’t like bitcoin here. I don’t like the things that are at this point,” the so-called Bond King said on CNBC’s “Halftime Report.” “Bitcoin, to me, is now a kind of bubble territory in terms of its way of acting.”

Gundlach’s comments come on Monday, as the price of bitcoin dropped sharply to less than $ 33,000 per digital currency. The cryptocurrency reached a record high of nearly $ 42,000 on Friday before it began to retreat. Bitcoin, however, continues to rise above 75% last month and more than 380% since April 1st.

The biggest manifestation of Bitcoin has reached the backdrop of the coronavirus pandemic, with governments around the world unleashing massive stimulus efforts to help troubled economies. This has caused inflation concerns for some investors, and bitcoin has been one of the assets they have targeted.

The increase in the adoption of bitcoins in general by institutional investors has been another credited factor to help drive their rise. And some people, like prominent value investor Bill Miller, believe that digital currency has more room to run, although its volatility is likely to remain.

“The total supply of Bitcoin is growing by less than 2% a year and it’s clear from the price that demand is growing much, much faster than that,” Miller told CNBC on Friday. “As long as this is achieved, bitcoin is likely to rise higher and perhaps considerably higher.”

Gundlach acknowledged that bitcoin bulls can be shown to be correct.

“People who point this out have a fantastic supply-demand dynamic, if in fact the institutions are involved, they are right,” Gundlach said. “That’s what can create these massive bitcoin rises.”

In January 2020, Gundlach predicted a short-term rise in bitcoin, potentially as high as $ 15,000 per coin a year.

The investor has had a more negative view in other cases. For example, in December 2017, Gundlach said, “If you miss bitcoin today, you’ll make money.” At the time, Bitcoin was trading above $ 16,000 per coin. It would continue to fall sharply, losing more than half of its value in December 2018.

Gundlach, explaining his current position on Bitcoin, said Monday that he was worried about investors who have become too optimistic.

“I think all of these things are in the oven right now and the commercial location is poor,” he said. “Even the dollar, I’ve been very negative against the dollar since January 2017, but in fact I became neutral against the dollar a little lower than what we are right now … just because these things seem like they have also achieved this deeply in the consensus narrative. “

“There are times when … people seem to be so on one side of the ship that I really don’t think the ship can sell it that well,” Gundlach added, “and I think that’s where bitcoin is on the upside. Right Now.”

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