Did we hit the bottom of the crypto market yet? Crypto investors, traders, and influencers have conflicting opinions on the subject. Some argue that we already hit the bottom slightly below $27K during Tera Luna crash on May 11, 2022. Others predict more downside, with $10,000 BTC being the most pessimistic scenario so far.
Former BitMEX CEO Arthur Hayes says the collapse of Terra (LUNA) is giving a hint on the bottom price of Bitcoin (BTC).
In a new commentary on Bitmex’s Crypto Trader Digest, Hayes says the decoupling of Bitcoin and Ethereum (ETH) from the equity market, historical prices and negative sentiment towards digital assets all point to crypto bottoming out.
“My bottom checklist:
Bitcoin / Ethereum move increasingly in a less correlated fashion vs. the Nasdaq 100.
The current price levels are very close to the previous cycle’s all-time highs.
The mainstream financial media gloats about how stupid and greedy plebs were who attained short-lived wealth investing in crypto.”
In May, the Luna Foundation Guard sold most of its Bitcoin reserves to maintain the peg of the TerraUSD (UST) stablecoin. Hayes says that the Terra meltdown hints at the lowest Bitcoin could go in the current cycle.
“At the bottom, a typically impervious strong hand can be forced to sell because of uneconomical arrangements festering in their trading books. The LFG is such a seller. To puke 80,000 physical Bitcoin is quite a feat. After contemplating the nature in which these Bitcoins were sold, I am even more confident that the $25,000 – $27,000 zone for Bitcoin is this cycle’s bottom.”
Hayes says that crypto will not make an immediate recovery as traders try to recoup losses during bear market rallies.
“Right now, many traders are sitting on positions that are down 50% to 90%. These traders are in a loss reduction mindset. They want to exit at a less bad price. They are not mentally primed to ship more capital in at these ‘bargain’ prices. Therefore, any rally will be sold into, until the underbrush in the forest is clear and the diamond-handed apes can emerge safely from hibernation.”
He says he is still confident that the prices of crypto will go back up, but it pays to wait.
“You don’t want to sell filthy fiat and buy Bitcoin / Ethereum early only to get shook due to a lack of confidence in your investment thesis. It is better to wait for the all-clear signal from the high clergy of the devil that it is time to join the crusade.”
Trader Predicts More Bitcoin Downfall
A crypto trader who goes by the name Capo on Twitter, feels the bearish scenario is still in play. There are no reasons to be bullish yet, he warns.
“I have been checking dozens of charts and all I see is bearish retests or liquidity take. Confluence for the bearish main targets is insane, and that would be 40-60% down for altcoins. Hidden bearish divergences everywhere on htf (high frequency trading). No reasons to be bullish yet.”
Also, the analyst predicts another 25% to 30% price decline in BTC. Following that, the recovery period could span up to three months, he said.
Capo is not the only one to call out an even deeped BTC bottom. In fact, the overall sentiment in the market is bearish, going by the Twitter activity of active traders.
Around a week ago, another crypto trader Ash said he predicts a Bitcoin bottom at $14,000 in this cycle. “This cycle’s Bitcoin bottom will be around $13k – $14k.“
Top Reddit Contributor Predicts $10,000 BTC
One of the Top Reddit contributors who goes by name Acceptable_Novel8200 also predicts more BTC and ETH downside, providing the most pessimistic projection so far at $10,000 BTC.
“After 2017 crash, it roughly took 1 year to find the bottom for BTC and ETH. The so called experts telling you this could be the bottom then take that with the grain of salt. If we match the 2017 drawdowns for BTC and ETH, it’s 85% and 95% respectively, then we are looking at levels of $10k BTC and $250 for ETH. It might seem highly unlikely, but the market is surely reflecting some fear of this happening.”
Indeed, after hitting the all time high at $18,491 on December 6, 2017, Bitcoin went on a downward spiral, but didn’t reach the bottom until a year later.
On December 14, 2018 Bitcoin finally hit the bottom at $3,216.
If we apply the same logic to the current crypto cycle, then $10,071 will put us at a 85% reduction from ATH of $67,145.
While history repeats itself, or at lest rhymes, one data point in time is not sufficient to predict a trend. Even a longer time horizon encompassing all prior crypto market cycles will not provide a robust prediction of the Bitcoin price bottom. Cryptocurrency is a new and evolving asset class. There were no institutional investors during the last market crash, and crypto adoption was significantly lower. These factors may reduce the volatility experienced in 2017-2018. However, interest rate hikes and quantitative tightening will likely lead to further deflation in asset prices.
In the era of major uncertainty and rapidly changing geopolitical and socio-economic landscape, it is difficult, if not impossible to predict the future. Only time will tell where BTC will hit the bottom this time around.
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