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Market Analysis: has BTC bottomed or not?

30 Jun, 2022
Market Analysis

In the great guessing game of the crypto market, the current hot question is: has Bitcoin (BTC) hit bottom? The answer would be key to predicting whether prices will recover or continue downward. Key on-chain and technical analysis indicators seem to point to BTC's price having already bottomed out, citing the recent dip to $17,600, but a recent report has predicted that its price could fall to as low as $10,000 in the short term.

The current global economic situation of rising inflation and interest rates has exacerbated volatility in crypto markets and forced a bearish trend across financial markets generally. Bitcoin failed to break past the $21K resistance, sinking to near $20K once again on the last day of trading. Ethereum (ETH), the second-largest cryptocurrency by market cap, is trading under $1,200 at the time of writing on 29 June 2022, a decrease of over 7% in the last 24 hours.

Some crypto investors believe that Bitcoin's price still has more room to fall, possibly even to as low as $10K in the next few weeks. They point to historical drawdowns during previous bear market cycles. In 2013, Bitcoin's price dropped by 85% over a period of 407 days. A similar record drawdown occurred in 2017 when BTC's price fell by 84% over 364 days. The current drawdown is at 229 days and counting, resulting in a 73% drawdown so far.

Arcane Research's report shows historical drawdowns for Bitcoin compared to the current situation. / Source: Arcane Research

Analyst firm Arcane Research published a report with the above graph, commenting that if Bitcoin continues to follow the pattern of historical cycles, a bottom of around $10K should occur in Q4 2022.

However, Arcane Research also took care to point out how different today's circumstances are compared to previous price drawdowns, noting that "Bitcoin is now far more intertwined in the broad financial markets, with the Fed, US elections, crypto regulations and the stock market impacting its performance".

Given how much crypto has become a part of institutional finance and a part of many retail investors' portfolios, 2022's market may break historical trends from when crypto was still a very niche technology. New investors looking to accumulate BTC should keep an eye out for it to hit bottom, as this will be the cheapest time to enter the market and buy Bitcoin.

StormGain Analysis Team

(crypto trading, exchange and storage platform)

 

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