Expert urges waiting for a deleveraging wave before Bitcoin recovery

Bitcoin needs to shed excess leverage to regain stability. This was stated by Ruchir Sharma, CEO of Rockefeller International, in an interview with CoinDesk.

The former Morgan Stanley executive and New York Times columnist compared the first cryptocurrency to Amazon. In the early 2000s, after the dot-com crash, the e-commerce giant’s shares fell by about 90%, but over the next 20 years their value rose more than 300-fold.

“Digital gold is basically a good idea that has been spoiled by too much cheap money and speculative interest,” Sharma said.

According to the expert, Bitcoin remains caught in a “speculative mania”. Over the next six months, on the backdrop of a weaker stock market, the negative re-pricing could continue, but thereafter it should return to its highs.

The expert noted that, on average, bear markets on Wall Street last about a year, during which the drawdown reaches about 35%. To date, that time frame has not been met; the pullback from ATH stands at 20%.

“I’m not yet ready to claim that we have bottomed for Bitcoin and cryptocurrencies. The negative momentum in the United States, and risk appetite globally, remains in play,” he explained.

Sharma allowed for the scenario where Bitcoin could replace the US dollar as the world’s reserve currency within three to five years if its volatility subsides.

Earlier, a Bloomberg strategist forecasted Bitcoin to hit bottom and recover in the next six months.

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