Whenever an asset gets bogged down in a prolonged decline, people look at charts and indicators that might suggest that the price has bottomed out. For Bitcoin, plenty of action indicates that such formation occurs through technical signals.
The Bitcoin Reaching its Bottom Price
Glasnode analysts track the number of indicators, such as when Bitcoin goes below a moving average or when it closes below a balance price measure which reflects the value of coins realized against the value paid. Analysts are seeing these measures moving in a similar manner that rarely happens.
Analysts say that similar patterns have been seen only six times in the last five years. Some have coincided with bottoms seen in the bear market in November 2018 and March 2020. The question is whether, if this time, it will be otherwise.
Thursday saw Bitcoin closing its worst quarter on record with a 60% decline in value from April to June. Since November 2021, the coin has lost 70% of its value. As per Arcane Research, bitcoin’s trading value has dropped substantially in this environment.
Meanwhile, the Asset under management (AUM) for crypto investment products reached a record low in June. As per CryptoCompare, the ETFs experienced the largest decline of more than 50% to $1.3 billion.
The usual culprits to blame is the Federal Reserve for increasing the interest rates to tame inflation even if it means sell-off in multiple asset classes that sour sentiment and injure the economy. The downturn has impacted a growing list of lenders, hedge funds, and crypto firms. Dan Morehead of Pantera Capital recently said that more significant meltdowns are expected in the coming months.
Ross Mayfield, an investment strategist at Baird, said that plenty of pain has already been factored in the crypto coin, especially Bitcoin. But this does not mean it will not go lower as the Federal Reserve will continue to raise rates. The appetite for speculative and risky assets will be meager.
According to Arcane Research, on-chain activities are high during a bull market and the market crash when players offload their positions. Such activities drop when the price stabilizes at a lower level. The Bitcoin blockchain has gone into a hibernation phase.
One positive sign is seen when Brett Munster of Blockforce Capital highlights that coins are taken out of cold storage and put back into exchanges during bear markets. This indicates an intention to sell, but that is not happening now.
Munster wrote that they have seen a steady flow of Bitcoin out of the exchanges and accumulated for the long term. The number of wallets with amount more than zero is increasing, for Bitcoins are growing, among other developments. He said that unlike the drop in demand for bitcoin in 2018, there are slowing down signs today.
