Hedgeye Risk Management CEO Keith McCullough Says Bitcoin Bubble Bursts Now Cryptocurrency Has Entered Quad 4 Phase
Bitcoin, the top cryptocurrency, is struggling to get back on its feet, extending its losses. It has now dropped to yet another intraday low of $37,683 on the Bitstamp exchange, the lowest level since early August.
The cryptocurrency lost more than 13% in 24 hours after hitting the $43,500 level on January 20. A colossal sum of $909 million in crypto was liquidated in the last day.
With futures in the red, the U.S. stock market is on track to have another rough day, reeling from the increasingly hawkish Federal Reserve.
Hedgeye Risk Management CEO Keith McCullough explains that Bitcoin peaked in November and then broke the trend before entering Quad 4 in end December.
Last week, he tweeted that he was out of Bitcoin and other momentum-driven risk-on assets.
Hedgeye uses its proprietary Growth, Inflation and Policy (GIP) model to gauge market sentiment and forecast asset returns. It is divided into four economic regimes (quads), with Quad 4 generally representing the most unfavorable environment (lower inflation and slower words).
McCullough’s words should be taken with a grain of salt since the model is not perfectly reliable. The analyst became a source of ridicule within the cryptocurrency community after famously selling his entire Bitcoin stash in early October at $10,000, claiming that the Bitcoin community was driven by narratives and emotion instead of math. This happened right before the top cryptocurrency went on to quadruple in value in just a few months. A separate Twitter account was created in order to track McCullough’s poorly timed trade.