Analysts say bitcoin range ‘more consolidated’ until ‘macro-catalyst’ emerges

Analysts say bitcoin range 'more consolidated' until 'macro-catalyst' emerges

Historically, the loss of value realized in the cryptocurrency market over the past few months has entered the record books and the total capitalization of the cryptocurrency market has fallen from $ 3 trillion to $ 991 million.

June was a very painful month for investors after bitcoin (BTC) price fell nearly 40% to mark one of the worst calendar months on record, according to a recent report from market research firm Delphi Digital cryptocurrencies.

BTC / USD vs MoM% monthly candle change. Source: Delphi Digital

In the face of sharp market correction, a number of BTC price metrics on a chain have begun to reach levels similar to those seen during previous market lows, but that does not mean that traders should expect turnaround anytime soon, as history has shown. weakness can drag on for months.

Macro Headwinds Weigh on BTC Price

One of the key factors weighing cryptocurrencies and other risky assets is the strength of the US dollar.

Year-on-year change in the DXY index relative to the year-on-year change in the BTC / USD price. Source: Delphi Digital

Combined with rising inflation and falling economic indicators, the strength of the DXY is a sign that an economic slowdown is almost inevitable, with forecasts now claiming a recession in early to mid – 2023.

Against this backdrop, BTC is now looking to create a local bottom around the 2017 high cycle near $ 20,000, “the last clear structural support on a bitcoin high-scale chart. »

1 week price performance chart BTC / USD. Source: Delphi Digital

This current cycle is the first time in bitcoin history that the price has fallen below the full-time high during a previous bull market cycle. If BTC fails to maintain support close to $ 20,000, Delphi Digital reported that “support should be expected at around ~ $ 15,000, then ~ $ 9,000 to $ 12,000 if that level does not occur.”

While these estimates may seem grim, it is worth noting that the price of BTC fell by about 85% between peak and trough during each of the previous two major bear markets.

If the same thing happened during the current bear market cycle, it would raise BTC at $ 10,000, representing a further 50% decline from current levels and entering the 2018-2019 price range.

For this reason, analysts at Delphi Digital believe that “even more pain lies ahead with dangerous assets. »

Read also: Bitcoin is in danger of hitting a new low as $ 20,000 amid dollar / euro parity

Where is the bottom?

The percentage of bitcoin supply kept in profit and the profit-to-loss ratio realized on bitcoin are approaching the levels seen in previous bear markets, but each still has “a small margin” before reaching the part lowest of this cycle, according to A to digital delphi.

BTC / USD price compared to the realized profitability ratio. Source: Delphi Digital

According to the firm, “momentum indicators and valuation measures can remain oversold or undervalued for a long time”, making them “poor timing tools”, for which immediate reversals are unpredictable.

Contrasting investors may want to keep an eye on market sentiment as well as the Fear and Overcrowding index, which has now reached all-time lows.

BTC / USD price against the Fear and Seaward index. Source: Delphi Digital

Regarding a potential upside move, Delphi Digital reported that “BTC has the top spot due to the previous sell-off after 3AC,” and identified the next major resistance level at $ 28,000.

Delphi Digital said,

“BTC is likely to continue to consolidate until we have some kind of macro-catalyst. »

The views and opinions expressed herein are those of the author only and do not necessarily reflect the views of All investments and trades involve risk. You should do your own research before making a decision.

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