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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.

bitcoin price

Bitcoin Price Chart from Coinbase

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:


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[O]nce a full five-wave sequence is in place, the market should in theory enter a corrective phase….This can last at least one-third of the time it took to complete the preceding advance and retrace at least 38.2 percent of the entire move.

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.”

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Posted by Josiah Wilmoth

Josiah is a former ancient and medieval literature teacher. He has been writing about cryptocurrency since 2014, and his work has been cited in Business Insider, NPR, and Yahoo! Finance. He lives in rural North Carolina with his wife and son. Email him directly at josiah.wilmoth(at)cryptocoinsnews.com.