Bitcoin closed out one of its worst quarters on record on Thursday.
It’s a perennial practice whenever an asset gets caught in a prolonged and deep downtrend: people look at charts, they go to this or that indicator and they pull out their checklists to try to figure it out. When can he get the destination? For bitcoin, there are a lot of such actions taking place at the moment, with technical indications suggesting such formations in the past.
Glassnode’s analysts track a number of measurements – from instances when bitcoin falls below a moving average to when it closed below a so-called balance value measure, which reflects a market price that is comparable to what was paid for the coins. Matches the value which is the eventually realized value. What they are seeing now is that many of these measures are equally glaring, something that rarely happens.
Over the past five years, analysts say, there have been only six other similar segments, some of which have coincided with bear-market bottoms, such as in November 2018 and March 2020. But can it prove otherwise this time?
Glassnode analysts wrote, “Bitcoin bottom formation case at a strong confluence with observable dominance of strong-arm investors, historically significant lows in several macro oscillators and prices in striking distance of several bear-market pricing models.” is based.” “However, can these HODLers hold the line?”
Bitcoin closed out one of its worst quarters on record on Thursday, giving up 60% in the April-June stretch. By Friday the coin had lost 70% in value since its November highs. According to Arcane Research, in this environment, bitcoin spot trading activity has fallen “substantially”. Meanwhile, assets under management for cryptocurrency investment products hit a record low in June, with the ETF experiencing the biggest decline ever — that category saw a drop of more than 50% to $1.3 billion, according to CryptoCompare.
The usual culprits were to blame: a Federal Reserve bent on raising interest rates to reduce inflation, even if it hurt the economy; A sell-off and sour sentiment across multiple asset classes; And a growing list of crypto firms, lenders and hedge funds were crippled by the recession. Dan Morehead of Pantera Capital recently said that more “major recessions” are likely in the coming months.
So far a lot of the pain has already been priced in crypto—or at least bitcoin, says Ross Mayfield, investment-strategy analyst at Baird. But, “that’s not to say that it can’t be much lower in the near term as the Fed will continue to raise interest rates, and if we enter a recession, the appetite for highly risky and speculative assets will also diminish,” he said. Said by phone. “It is certainly facing a challenging environment going forward,” Mayfield said.
According to Arcane Research, on-chain activity tends to be higher during bull markets and further increases during market crashes as participants scramble to land their positions. When its price stabilizes at a lower level, such activity also declines. The firm’s Jaron Melrud wrote in a note, “It looks like we’re in that phase now.” “The bitcoin blockchain has gone into hibernation mode as the crypto winter marked its presence.”
A positive sign: Brett Munster at Blockforce Capital points out that usually during bear markets, coins are taken out of cold storage and deposited back on exchanges, which may indicate an intention to sell. Right now, it is not so.
“In addition to the ~80,000 coins thrown into the market by the Luna Foundation in an unsuccessful attempt to protect the peg of UST, we continue to see a steady flow of bitcoin from exchanges and held away for long-term accumulation,” Munster wrote. In addition, among other developments, there is an increasing number of wallets with non-zero amount of bitcoin in them.
“Unlike 2018, when demand for bitcoin declined during that price crash, adoption today shows no signs of slowing down,” he said. “Despite the recent price crash, the fundamentals of bitcoin are now stronger than at any time in its history.”
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