Ian Harnett Predicts Bitcoin Will Drop to $13,000

Absolute Strategy Research co-founder and Chief Investment Officer Ian Harnett argued Tuesday that central banks had a role to play in pushing unemployment rates higher — and said he expected the price of bitcoin to fall to $13,000 in the process.

“We never want to see a recession, but you’ve got to get inflation down,” Harnett said in a morning appearance with CNBC’s Squawk Box Europe host Steve Sedgwick. “Central banks are going to have to engineer excess capacity. That means unemployment has to go up. Demand has to come down relative to that supply.”

Switching topics, Sedgwick asked Harnett whether cryptocurrency was a “metaphor for greed,” prompting Harnett to say it was “a metaphor for liquidity.”

“What we’ve seen is that in a world where liquidity is plentiful, the bitcoins of this world do well,” Harnett said. “When that liquidity is taken away … then you see those markets come under extreme pressure.”

“We always make the point that bubbles — and, you know, we define those as anything that goes exponential on the long scale — which, you know, bitcoin did, and other cryptocurrencies did — they tend to lose 80 percent of their value,” he added. “That would take you back, actually, to about $13,000, which is one of the key support areas for bitcoin. So, you know, we would still be selling these kinds of cryptocurrencies into this environment. … What we’ve found is that it’s neither a currency nor a commodity, and certainly not a store of value.”

Harnett’s comments came a day after Bitcoin Suisse Director Giles Keating appeared on the same program to make the opposite prediction, telling Sedgwick that massive price drops for bitcoin and Ethereum over the weekend were “a sign that a lot of … really big liquidations are now done, and that the base really is being formed.”

Bitcoin was hovering just above $20,000 as of early Wednesday and was on course to retest the $17,600 level it briefly touched on Saturday. Federal Reserve Chairman Jerome Powell was set to testify before the Senate Banking Committee beginning at 9:30 Eastern Wednesday morning, leading to a dip in stock futures more broadly as investors sought to offload risk ahead of his comments.

In other corners, Digital Currency Group CEO Barry Silbert — who has a history of expressing the greatest optimism shortly before massive dips in the market — said last week that he viewed the current cryptocurrency climate as “a period of opportunity” for buyers. CNBC host Jim Cramer, who also holds a reputation for sharing abysmally inaccurate market divinations, said Friday that he expected bitcoin’s price to fall to $12,000.

You can watch Harnett’s full interview on CNBC above via YouTube.