Market analyst Elliott Prechter has projected that digital currencies, particularly Bitcoin, will experience a sharp decline in the near future. Prechter has correctly forecast the surge of Bitcoin in 2010 when the cryptocurrency’s price was just six cents.

In his July 13, 2017 report, Prechter claimed that the Elliott wave pattern, optimistic psychology, and Blockchain bottlenecks will lead to the collapse of the digital currency market.

"The price activity and manic sentiment that led to present prices have dwarfed even the Tulip mania of nearly 400 years ago. The success of Bitcoin has spawned 800-plus clones (altcoins) and counting, most of which are high-tech, pump-and-dump schemes. Nevertheless, investors have eagerly bid them up.”

Previously predicted the stock market crash

Prechter is the son of analyst Robert Prechter, who founded the newsletter The Elliott Wave Theorist in 1979. Prechter correctly predicted the 1987 stock market crash using the Elliott Wave Principle. However, the accuracy of the Elliott Wave was put in question when Prechter’s forecast on the end of the 1990s bull market missed.

The younger Prechter, meanwhile, has correctly predicted Bitcoin’s rise when it was just priced at six cents in September 2010.

Bitcoin’s current performance

The surge in the price of Bitcoin in the past couple of weeks has caught the attention of several financial analysts. According to Ronnie Moas of Standpoint Research, the cryptocurrency could possibly hit $5,000 in the next few months.

Ritholtz Wealth Management chief executive officer (CEO) Josh Brown, meanwhile, blogged that he used Coinbase to purchase some Bitcoin. The banks Goldman Sachs and Morgan Stanley analyzed Bitcoin and its Blockchain technology in their latest reports.

Elliott Prechter, however, said that the excitement about Bitcoin surpasses the tulip bulb mania in The Netherlands in the early 1600s.

“A mania can be both a mania and a revolution at the same time."