This is not investment advice. The author has no position in any of the titles mentioned. Wccftech.com 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.
Past Bear Market Corrections Include:
• -93% in 2011
• -82% in 2013
• -86% in 2015
• -84.5% in 2018
• -72% in 2020 (COVID)
— Rekt Capital (@rektcapital) November 14, 2022
- 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.
monthly MPL of @balena_mappa🌐 makes it almost safe, in most cases, to determine the global fund of $BTC. The condition is that the current level of loss is equal to or > the maximum level of profit from the previous bull run.$BTC USD #bitc #bitcoins #ビットコイン @jobtcfx pic.twitter.com/O2heJsD2jS
— barovirtual.com (@BaroVirtual) November 22, 2022
- 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.
#Bitcoins The 3-day MACD has crossed and closed the Bearish for the first time since April
The previous two crossings resulted in movements of -46% and -57% AFTER the crossing was confirmed pic.twitter.com/Sl5rHsycN6
— Matthew Hyland (@MatthewHyland_) November 15, 2022
- 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.
It’s time to get excited about it #BTC rebound?
Let’s look at the previous three weekly candles
Last week $BTC has turned the lows of two weeks ago into a new resistance (black)
— Rekt Capital (@rektcapital) November 22, 2022
- According to Rekt Capital’s tabulation, Bitcoin continues to create new resistance levels.
It’s a bloodbath of Bitcoin miners.
Most aggressive miner sold in nearly 7 years.
Up to 400% in just 3 weeks!
If the price doesn’t rise soon, many Bitcoin miners will go bankrupt. pic.twitter.com/4ePh0TIPmZ
— Charles Edwards (@caprioleio) November 21, 2022
- 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 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.
— On-Chain College (@OnChainCollege) November 22, 2022
- Bitcoin has entered capitulation territory, as measured by net unrealized profit/loss.
How bad is the cryptocurrency crash?
My landlord friend in Dallas just asked me if I know anything about bitcoin miners:
“This bitcoin mining company went bankrupt, moved and left all its equipment behind.”
200 Antminers 🏃🏽♂️💨 pic.twitter.com/qUNStCYT5F
— Zack Guzman (@zGuz) November 21, 2022
- The miners are abandoning their equipment.
136,992 #bitcoins have been withdrawn from global exchanges in the last 30 days. Historical.
Drain. Their. All. pic.twitter.com/mLTqBlvsGY
— Dylan LeClair 🟠 (@DylanLeClair_) November 22, 2022
- The FTX saga has spurred a historic migration from exchanges. This should help curb the selling pressure on Bitcoin.
The percentage of #bitcoins last active supply in the last three months.
Probably nothing… pic.twitter.com/ElcN9xJIyO
— Dylan LeClair 🟠 (@DylanLeClair_) November 22, 2022
— Institutional Coinbase (@CoinbaseInsto) November 22, 2022
- Only 7.9% of institutional investors expect cryptocurrency prices to rise in the next 12 months. This is indicative of a capitulation mentality.
2/ Due to the talk of the free fall of the market, $BTC it once fell to $15,600 before bouncing to $16,100 atm, marking a 0.7% gain over the past 24 hours.
This happened like @coinsharesco identified 75% of total inflows coming from short products: https://t.co/q92J31erbC
— COIN360 (@COIN360com) November 22, 2022
- Investors are shorting Bitcoin and Ethereum like crazy. This will provide the fuel needed for an overwhelming rally once the bottom is formed.
#bitcoins past highs:
2013 > 4 quarters after the halving
2017 > 5 quarters after the halving
2021 > 6 quarters after the halving
Notice the pattern?#bitcoins past funds:
2015 > 6 quarters before the next halving
2018 > 6 quarters before the next halving
2022 > 6 quarters before the next halving ?? pic.twitter.com/C1qKOX4Dbo
—VX (@veraximago) November 22, 2022
- 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.