The bitcoin price posted another record high during the early hours of August 15, but it has since experienced a steep drop. On Coinbase, the bitcoin price has fallen 5% to $4,025.
Despite today’s downward movement, Sheba Jafari, a chief technical analyst at Goldman Sachs, says investors have a reason to be hopeful–at least in the short term. Two months ago, Jafari predicted that the bitcoin price would correct down to about $1,900 before approaching $4,000. Her forecast more or less proved correct, although the bitcoin price has extended past her maximum target during its bullish turn
Bitcoin Price to Approach $5,000 then Crash
On Sunday, Jafari sent a note to Goldman Sachs clients updating her forecast. She anticipates that the bitcoin price will continue to rise to a maximum of $4,827 during its fifth wave.
Jafari is not the only analyst to forecast that bitcoin will approach the $5,000 mark. Max Keiser made that claim in June, and BitMEX CEO Arthur Hayes recently told Business Insider that Segwit implementation puts $5,000 “within striking distance.” Stock researcher Ronnie Moas is even more bullish, predicting that the bitcoin price will surpass $7,500 by the end of 2017.
However, Jafari does not believe bitcoin will reach $5,000 during its fifth wave. In fact, she expects the bitcoin price to crash by more than 38% at the completion of the wave. As she told investors:
This crash would reduce the value of bitcoin below $3,000. Jafari says bitcoin could correct down as far as $2,221, a level the market has not seen since the mid-July downtrend.
If the market does move as Jafari anticipates, investors should not panic. Even a drop to $2,221 would still give bitcoin a year-to-date increase of more than 130%. Despite claims to the contrary, bitcoin is not analogous to 17th-century Tulipmania in Holland, and the markets should experience an eventual recovery. After all, even Goldman Sachs has admitted that cryptocurrencies are “getting harder [for institutional investors] to ignore.”