Bitcoin (BTC) could plunge another 50% from current levels if the coming winter proves to be a big test for Europe.
That’s the conclusion of old cryptocurrency market analysis this week as the BTC/USD pair failed to reclaim the $20,000 support.
In an interview with Cointelegraph, Filbfilb, the creator of the DecenTrader trading suite, predicted that the price of BTC could bottom out at $10,000 in 2022.
As the European energy crisis intensifies, risk assets face a major test, he says, and how much the cryptocurrency will suffer depends a lot on how it can win diplomacy to avoid a major emergency in 2023.
The numbers are not just the cream of the pie; At the height of the bear market of the penultimate cycle in 2018, Filbfilb perfectly timed the bottom of the market with BTC/USD at the bottom of $3,100.
Cointelegraph has obtained more details on how the coming cold season could affect the already fragile Bitcoin trading environment.
Cointelegraph (CT): You correctly identified the $3,100 floor of the last cycle. Is there likely to be another drop and what price do you think can be considered the bottom this time?
filb (FF): As it stands now, the price of bitcoin is highly correlated with “historical” markets, especially the NASDAQ, which we know is under tremendous pressure due to the Federal Reserve’s monetary policy. So this time “it’s a little different” because of the high correlation and external economic forces.
Last time it was pretty easy because of what was attributed to the $3,100 low and an 85% correction. This time around, the base amount is around $11,000; $20,000-$10,000 doesn’t have much history over time.
I expect poor winter momentum to create a test of previous highs in the $10,000-11,000 volume range. The dialogue between NATO and Russia appears to be crucial to the continuation of events; the sooner that happens, the lower the bitcoin will go.
CT: How is the current cycle different from the previous bear market? Does the macro play a much bigger role in this cycle?
FF: As mentioned above, the correlation with “heritage” is crucial; bitcoin did not exist in an economy with high inflationary pressure and behaves as a risky asset rather than an inflation hedge. So, the story is different this time, to some extent. However, we are settling within the normal time frame and the normal percentage change from normal for the current situation. So, for now, it’s “same, same but different”.
CT: You recently said that a “rally in the first quarter is very clear”. What makes you so sure about this?
FF: Two reasons:
First, if you use the starting point of the bitcoin cycle as the actual date that half of the supply was released, bitcoin usually ends the bear market after about 1,000 days, which would be the first quarter, after the new story commencing.
Secondly, we will have passed the winter; From a game-theoretic point of view, it looks like if things are bad but Europe winters economically, things will be very positive for most of the next year, and if things are at worst, it increases the likelihood of dialogue, which I argued would provide short-term stability. This is a positive thought, so I would give this case a 2/3 chance.
CT: What do you think about Ethereum moving to proof? Does it strengthen its long-term value proposition?
FF: A sensitive issue; only time will tell, but reducing coin emissions should be a valuable catalyst.
CT: Are you bullish on ETH/BTC (and altcoins) with the Merge approaching in two weeks? Or will it be a news sales event?
FF: I am bullish on ETH in general. Effectively it is like a half effect. History tells us that we rally at these types of events and fall soon after, but the general direction is up.
I’m sold on that idea, but the big spoiler is the release of the CPI data around the same time. Much will depend on this; Positive CPI data and a news selling event mean that BTC may outperform in the short term, but in the next cycle ETH’s position should be quite strong. Normally.
CT: Were you surprised by the fall of 3AC? Is there still systemic risk?
FF: I was surprised that supporters did not do their due diligence on the arrangement beyond speculation. However, running a business in a space that has grown exponentially has resulted in lower costs, so that’s not surprising.
Also Read: BTC Price Sees Another Showdown at $20,000 – 5 Things to Know About Bitcoin This Week
Naivety is probably the best way to look at it; Each believed in their own hype and ignored the risk. It is a shame for the concerned financial professionals who should prioritize risk over growth. We know the volatility of cryptocurrencies; to ignore them is amateurish at best, negligent at worst – given the values at stake, it’s probably the latter.
CT: In September, is the Fed supposed to drain more dollar liquidity through quantitative easing?
FF : Yes, I think this will show that the Fed is strong and will raise rates depending on good or bad news. The good news gives them an opportunity to do that; the bad news means they have to.
CT: Will this negatively affect the price of BTC in 2023?
FF : It depends on the winter in the EU. Everyone forgets the relationship between the EU and the US – if the EU is abused, the US will suffer; imports will be expensive and demand will fall.
We’ll see how the winter goes.
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