Bitcoin Miner’s Capitulation Is Now Helped By FIFA’s ‘World Cup Effect’ As Bulls Set Eyes On 2024 Halving Event

This is not investment advice. The author has no position in any of the titles mentioned. has a disclosure and ethics policy.

Bitcoin (BTC) is now officially in its second longest bear market, having just passed the duration of the recession in 2018. Even as bulls pin their hopes on the 2024 halving event and the favorable effects preceding it, the leading cryptocurrency the world will probably suffer much more. Let’s go deeper.

Bitcoin bulls are likely to have more losses ahead

A growing body of evidence suggests that cyclical lows for Bitcoin sit firmly below the prevailing price.

  • Bitcoin typically posts a loss of more than 80% from its previous all-time high. In fact, the very short-lived recession during the peak of the COVID-19 crisis has been the only exception to this rule. Right now, Bitcoin is only down 76% from its all-time high of $69,000. This suggests that further losses are likely to lie ahead.
  • The Twitter account @balena_mappa regularly publishes Moving Profit and Loss (MPL) data for on-chain Bitcoin transactions. Baro Virtual recently identified a very good method to identify a cyclical low for BTC. Basically, the current level of loss, as dictated by the MPL tabulation, must exceed the maximum level of profit from the previous bull run. So far, those losses total $671 million, while the peak profit from the previous bull run is between $1.3 billion and $1.7 billion. This suggests that Bitcoin’s on-chain transactions must experience further losses of “$629 million to $1.029 billion” to firmly establish a cyclical low.
  • Mathew Hyland regularly posted updates on Bitcoin’s 3-day MACD moves. A few days ago, the MACD crossed over and closed in bearish territory. The previous two crossings resulted in losses of -46% and -57% respectively.
  • According to Rekt Capital’s tabulation, Bitcoin continues to create new resistance levels.
  • Bitcoin miners are selling at their most aggressive levels in nearly 7 years. While this is conducive to a bottoming process, further losses are likely to lie ahead in the near term.
The correlation between Bitcoin and the S&P 500 index is currently around 50%.
  • The World Cup Effect: Wu Blockchain recently gathered interesting evidence. According to research by academics led by Alex Edmans, global risk markets underperformed during the FIFA World Cup, periods characterized by below-average market volume. Given the considerable correlation that still exists between Bitcoin and US stocks, this strange phenomenon also supports the argument that further losses lie ahead for the world’s leading cryptocurrency.

“In the case of US stocks, for example, the study found that the average stock market return during the World Cup was -2.58%, while the average return for all days during the same period was -2.58%. +1.21%”.

The halving event is the proverbial light at the end of the tunnel

However, not all is doom and gloom around Bitcoin. We present some evidence to support that a cyclical bottom is near.

  • Bitcoin has entered capitulation territory, as measured by net unrealized profit/loss.
  • The miners are abandoning their equipment.
  • The FTX saga has spurred a historic migration from exchanges. This should help curb the selling pressure on Bitcoin.
  • Only 7.9% of institutional investors expect cryptocurrency prices to rise in the next 12 months. This is indicative of a capitulation mentality.
  • Investors are shorting Bitcoin and Ethereum like crazy. This will provide the fuel needed for an overwhelming rally once the bottom is formed.
  • But perhaps, our most important proof can be found in the tweet above. Note that Bitcoin bottomed out in 2015 and 2018 about 6 quarters before its halving. The next halving event is scheduled for April 2024 or Q2 2024. This analogue suggests that Bitcoin should bottom out in Q4 2022, as we detailed in a previous post.

Do you think the freezing nights for Bitcoin and other cryptocurrencies are about to end soon? Let us know your thoughts in the comments section below.

Leave a Reply

%d bloggers like this: