Where will Bitcoin (BTC) bottom out? As investors face the crypto bear market, they are looking for signals that the market has bottomed out. There are no sure signs, but here are the forecasts from experienced analysts.
Signs that Bitcoin price could bottom
Bitcoin surpassed nearly $69,000 in November at the end of the 2020-2021 bull market. Since then, it is bearish and there is no bottom in sight. But in this bear market, there is bound to be a bottom somewhere. As the analyst nicknamed “Cred” puts it, “the bottom is usually only open in the background. Just like above”. In the rest of the article, let’s get opinions from experienced traders and investors on whether the bottom is important and what alternatives individual investors can look for…
What do the macro conditions say for Bitcoin?
As you follow on Kriptokoin.com, Bitcoin’s price correlation with US stocks is at an all-time high. The world’s largest cryptocurrency is trading like the major tech stock on the Nasdaq. Therefore, when analyzing Bitcoin’s price action, it is necessary to take into account the macro conditions that support the real world economy.
GlobalBlock analyst Marcus Sotiriou has this to say about the impact of macro conditions on Bitcoin:
A big Bitcoin bottom signal for me is data that shows inflation convincingly falling. As we learned that the Federal Reserve is king when it comes to risky assets like crypto and that the pain of quantitative tightening could be months away, I’d be wary until inflation starts to drop.
It is certain that most of Bitcoin’s price action is tightly correlated with macro conditions. Therefore, it makes more sense to pay attention to a macro-bottom.
But timing a macro bottom isn’t easy either.
Timing the macro bottom will depend entirely on the Fed’s decisions, according to Marcus Sotiriou:
I don’t think we’ll be convinced of a macro bottom until the Fed slows rate hikes. But if the Federal Reserve makes a U-turn on its stance, the market will gain confidence. The point where we see this happen is when Bitcoin makes a significant move from the lows.
accumulation phase
Bitcoin (BTC) price dips have some common features. On the backlog, analysis by Valkyrie Investments head of research Josh Olszewicz is noteworthy:
The bottom price in 2015 came after being held in a narrow price range for a year. Also, the 2019 low came after a three-month period of low volatility. Bottoms usually take time to form. Because the volume of buyers and sellers eventually comes to an equilibrium until demand exceeds supply. Technically, these long periods are called “accumulation”.
Bitcoin and altcoins are often volatile with extreme price movements
But sometimes they become dull and move horizontally. Olszewicz says Bitcoin price dips historically follow “prolonged low volatility and unexciting price action.”
Signs of accumulation include “multiple touches of the 200-week moving average, as well as holding below the actual Bitcoin price or the total average price of all cryptocurrencies carried on the Blockchain,” Olszewicz said. According to the expert:
Rather than trying to time the bottom perfectly, savvy traders often look to previous bear markets for these technical signs and start at the average dollar cost when similar conditions are met.
Impairment period
Rather than envisioning the bottom as a single price point, it may be more helpful to think in terms of price ranges. Here are the tips of the crypto analyst nicknamed ChimpZoo:
Many traders try to time full lows or full highs. Often times they fail to do so. Rather, they should look for periods of overvaluation and undervaluation and trade accordingly.
Examples of low valuation periods are historically the onset of the COVID-19 pandemic. Another example is marked by massive Bitcoin sales such as the crash in November 2018. Finally, for this period, ChimpZoo says, “$6,200 in 2020 made no difference in the outcome.”
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