Guggenheim CIO Says Bitcoin May Have Topped Out for Now

Bitcoin's bull run may have peaked and the cryptocurrency could suffer a significant price pullback, according to Guggenheim Partners Chief Investment Officer Scott Minerd.

"For the time being, we have probably put in a top for bitcoin for the next year or so," Minerd told CNBC on Tuesday, adding that the cryptocurrency could retrace to $20,000.

Bitcoin reached a record high of $41,962 on Jan. 8 and has been mainly restricted to a range of $30,000 to $40,000 ever since. The uptrend began in early October, when the cryptocurrency was trading near $11,000 and went ballistic in the second half of December, with prices rising from $19,000 to $38,000, according to CoinDesk 20 data.

Price pullbacks often follow such big rallies. "When we have a doubling of a price of an asset in the course of a month, we are prone to having a setback," Minerd said while explaining the rationale behind his forecast for a decline to $20,000.

Minerd told Bloomberg a month ago that bitcoin's fair value was $400,000 and recently warned of speculative frenzy gripping the market. Guggenheim Partners, which manages more than $230 billion worth of assets, started investing in bitcoin when the cryptocurrency was trading around $10,000.

Minerd also shared his view on traditional markets, pointing to the Federal Reserve's open-ended liquidity boosting bond purchase program as the main reason for the slump in the U.S dollar.

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The dollar index (DXY), which tracks the greenback's value against major currencies, fell by 6.83% in 2020 and recently reached a 34-month low of 89.21. "Trend in the dollar is for more weakness," Minerd said.

Bitcoin and the Dollar Index have moved in opposite directions since the March crash, and the inverse correlation between the two is strengthening.