Legendary Trader Peter Brandt Thinks Bitcoin Could Drop to $28,000. Should Investors Be Worried?

The man who predicted the 2018 crypto crash says there's more pain in store for investors.

The price of Bitcoin fell below $36,000 yesterday in what was the biggest intraday drop since January. Economic and geopolitical factors, particularly efforts to curb rising inflation and the Russia-Ukraine conflict, have hammered high-risk assets like crypto this year. 

Bitcoin's (BTC) price has mostly hovered between $37,000 and $42,000 so far in 2022 -- a far cry from its November high of over $68,000. It's slipped higher and lower at certain points, but hasn't been able to establish any kind of sustained momentum. 

Peter Brandt's $28,000 warning

Unfortunately, veteran trader Peter Brandt warns things can still get a lot worse. He tweeted recently that Bitcoin could fall to $28,000, if it follows the pattern he's identified. "The completion of a bear channel typically results in a decline equal to the width of the channel, or in this case a hard test of 32,000 or so -- my guess is 28,000," he said on April 30. "This does NOT make me a hater," he added. 

Brandt, who has been trading commodities since 1976, has written several books on understanding chart patterns. His company, Factor Service, is a research and trading firm that covers futures, forex, and commodities, as well as Bitcoin and crypto. 

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The seasoned trader is widely recognized for predicting the crypto crash of 2018. Not only does he warn there's further potential pain ahead, he also says we shouldn't expect a speedy recovery. According to his analysis, corrections take time and we're unlikely to see any new all-time highs in the near future. Earlier this year, he tweeted, "Long endurance, not constant hype, should be the message."

The chartist has been critical of a lot of the hype in the crypto industry, particularly those who keep promising prices will go to the moon. Nonetheless, Brandt is relatively optimistic about Bitcoin's price long term. Last month, he tweeted that BTC could increase tenfold in the coming years if it doesn't stagnate.

Should investors be worried?

A price drop to $28,000 would be difficult for many investors to stomach, especially those who bought crypto for the first time last year. Many new investors have seen the value of their portfolios drop significantly, and some regret their crypto purchases. 

If you've already lost money, it may be tempting to cut your losses and sell now. However, if you do that you'll lock in your losses. It means you won't benefit from any price recovery. If you bought Bitcoin because you hoped it could eventually reach $100,000 or more, you won't realize those gains if you sell.

Last year, when crypto soared to new highs, there was a lot of money sloshing around in the economy and people were more willing to take a chance on high-risk assets. Now, economic tightening measures and fear of recession make riskier investments like crypto less appealing. But this will eventually pass. 

The challenge is that there's a lot we don't know about what will happen to crypto. We don't have a lot of price history for the crypto market, so it's hard to use it to make predictions. Plus, we don't know what impact a recession or increased regulation will have on the development of this emerging industry. That's why the golden rule of crypto investing is to only invest money you can afford to lose, and ensure your investments are part of a balanced wider portfolio.

Bottom line

Investing is a marathon not a sprint. There are no guarantees, but it's important to remind yourself of the reasons you originally invested. Perhaps you think Bitcoin could become the digital currency of the internet. Perhaps you believe smart contracts could change the whole finance industry, or that blockchain could transform the way we work. 

A dip to $28,000 will understandably worry many investors. However, a lot can change in the next 10 or 20 years. Assuming your original reasons for buying crypto still stand, keeping a long-term perspective may help you weather the storm.